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The SAFEST Option Investing Strategy (Robinhood Tutorial)

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Pandrea Finance

In todays video I’m going to teach you how to use options as a safe and reliable investment strategy learn how to trade options with Robinhood!

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Today's Robinhood Investing Strategy:
Understanding LEAPS Options LEAPS stands for LongTerm Equity Anticipation Securities. LEAPS generally are considered any option contract with an expiration date longer than 1 year. The idea of investing in LEAPS is to allow investors like you and me to benefit from the underlying stock moves while using LESS capital than you would by purchasing the SHARES alone. One options contract represents 100 shares of the company you invest it. Using options contracts to control 100 shares (rather than buying shares) can decrease your initial capital when investing.

Understanding DELTA in Options The point of using the Greek Delta is to lower your risk when using options. Delta is defined as the expected change in an options price relative to $1 movements in the underlying stock price. So Delta is going to help us to determine how the option price will move. Delta values you’ll notice will go from 0 to +1 with calls. So for example, if we have an option with a delta of .25 then with every $1 that the stock price moves, the OPTIONS price will increase by $.25 cents. If we have a delta of .75 then for every $1 that the stock moves, the options price will increase by .75 cents. And going to a delta of 1 means that for every $1 the stock price moves, the option price will rise by $1 and THIS means that when you have a delta of +1 this will equal the same movements as owning 100 shares of the stock. So if we want to MIRROR our investment of 100 shares in a company using options we want to buy a call option with a delta of +1 or as close to +1 as possible. To get that, generally we want to buy safe ITM options expiring more than 1 year out.

So to recap, if you want to mirror your investments your already making of 100 shares of your favorite company, use ITM LEAPS call options with a delta of +1 and you should be good to go.


NOTE: I am not a financial advisor none of the above video is meant to be taken as investment advice. I am just showcasing MY own strategy and my investments should not be tried and duplicated based solely off the information in this video for risk of losing money.

posted by aclatatsgz