Future Option Tips from Jeff Weber

We Help You Make the Climb

AIM is always hungry and looking for new LEAPS to feed on.  What factors go into making a LEAPS a good future option buy?  I’ll tackle that issue in this blog post.

Get Future Option Tips in my Monthly Newsletter

I have been writing a monthly AIM investing newsletter for 29 years.  In every issue I recommend a list of LEAPS that I like as a good BUY for a future option.  I recommend LEAPS that are good buys currently – ones you can get started with if you are newcomer starting AIM for the first time or a seasoned veteran looking to add one or two new LEAPS to your existing portfolio.

How I decide what future option LEAPS are good option buys now

I have come up with some basic good rules to help find good new LEAPS to consider as a buy option. For long-term investors who care about long-term profits, here are 4 tips to find your profitable future options:

Look for companies at or near their 52-week lows

All stocks and options have 52-week highs and 52-weeks lows. We hopefully want our new LEAPS to go up and give us a sell or two before it goes down and produces buys for us.

PYPL (Paypal) has a 52-week range of:  $92.25 (52-week low), $310.16 (52-week high) and a current price of $114.79 as I write this article. PYPL easily fits our criteria of being near its 52-week low.

Look for a LEAPS at or near the money with high LEAPS ownership

You see PYPL stock had a 52-week high $310.16 so decided to suggest new AIMers buy the Jan 2024 Strike 150 Call which is selling at $15.75 an option or $1,575 a contract. One contract is 100 options. You have to buy and sell contracts with LEAPS. (That's more leverage to earn more profits!)

PYPL has 2,528 owned contracts and traded 10 contracts on Mar 28, 2022.  I like to see ownership of at least 1,000 contracts and an option that has some trading daily.  PYPL fits the bill.

Invest in companies for the long haul

I like household names. Everybody has heard of PayPal. And it's not going to disappear anytime soon!

Look at the option full historical data

Look at the LEAPS option since it was issued (Sep 13, 2021) and see what its high and low is:

On October 11, 2021 shortly after being issued the PYPL Jan 24 Strike 150 LEAPS hit its high of $129.30.

Today (Mar 28, 2022) it is selling at $15.20!!!  That’s an incredible drop on a high-quality LEAPS. That high/low difference easily makes me decide to suggest this long term option to buyers now.

Follow the intent of how I chose PYPL with any other LEAPS you want to look at to see if it is a good future options buy at the current time you are looking.

Detailed steps to find your future options buy

Below is the easy way to look up everything above:

You can do all the looking up you need for free on Yahoo Finance. Here’s how to do it:

  1. Go to Yahoo Finance
  2. type in the symbol of stock or option you want to find. Yahoo Finance defaults to a summary page.
  3. Look up the 52-week high, low and current price.
  4. See if the current price is near the 52-week low.
  5. Then click on Options. Yahoo Finance defaults to the shortest options
  6. Click on the down arrow in the Date box.
  7. Click on Jan 2024 options (or farthest future options that expire in January when they are issued in September each year).
  8. Now look at the 2024 options At or Near the Money and look for an option that has at least 1,000 owned options – owned options called “Open Interest” on Yahoo Finance & everywhere else.
  9. Then find an option that meets the criteria above and think about buying it!

Below is what I call the “LEAPS license plate” that you click on to find the high and low of the LEAPS.

PYPL240119C00150000 Strike 150 150.00 44.01%

 

The difference between bad and good future option tips

I explained good future options – now a few words on bad future options to buy:

  • If stock does not have 2024 options (LEAPS) move on – it is a bad option to consider
  • If it has less than 1,000 owned “open interest” contracts owned – move on
  • If you never heard of the company then you must do research on the company. Yahoo Finance lists articles talking about the company from impartial sources. See what they say and see if they are positive towards the company going forward.

Good future LEAPS can always be found

Right now (March 28, 2022) we are in a temporary Bear Market because of Russian/Uranian War, inflation, COVID-19 and who knows what else.

The last good Bear Market for AIM was the Financial Meltdown in 2008-2009.  The Dow Jones Average fell from 13,000 to 6,500 a 50% drop.

The Dow Jones today is 34,706!!!  Long-term the stock market always goes up.  Now is the time to start your AIM journey to a much greater financial future!!!!

You are always welcome to phone me if you have a question about anything in this blog post!  Call Jeff at 210-478-0655.

Or take advantage of my complimentary newsletter subscription where every month you will see my list of GOOD BUYS for OPTIONS INVESTORS. Every company in my list meets the guidelines that I gave you here. Every company has both stocks and LEAPS options that you can invest in.

DISCLAIMER:

Jeffrey Weber is not an investment adviser and gives only his personal view and opinion, never making any investment advice or recommendation to buy or sell specific securities. Investors in financial assets must do so at their own responsibility and with due caution as they involve a significant degree of risk. Before investing in financial assets, investors should do their own research and consult a professional investment adviser.

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