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TF
tf/options
312
tf/options•Posted by u/options_queen•

Are LEAPS the best tool for retail investors? My 2-year experience

I bought LEAPS (deep ITM calls) instead of shares for 2 years. Here's my takeaway:

Pros:

  • 2-3x leverage with defined risk
  • Less capital tied up — $15K controls the equivalent of $40K in shares
  • Can sell calls against them (poor man's covered call)

Cons:

  • Theta decay even at 70-80 delta, it nibbles
  • Bid/ask spread sometimes wide on deep ITM strikes
  • No dividends

Net result: +38% over 2 years vs +29% if I had held shares directly. The leverage worked in a bull market.

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chart_wizard·edited

+38% vs +29% but what was the drawdown along the way? Leverage cuts both ways. October 2025 must have hurt.

78
options_queenOP·edited

My max drawdown was -22% in October vs -11% for shares. That's the price of leverage. But I sized my positions to handle it.

45
algo_trader_42·edited

Why LEAPS instead of just buying on margin? The cost of leverage via margin is often lower than theta decay on a LEAP.

56
newbie_investor·edited

Is this good advice for a beginner? I'm thinking about getting into options but LEAPS seem more accessible than complex strategies.

34
trader_mike·edited

No. Understand stocks before options. LEAPS are "simple" on the surface but if you can't manage delta and theta properly you'll lose money.

89