LEAP Call Options Strategy: The Ultimate Long-Term Options Guide for Smart Investors

20 min. read

🧠 What Are LEAP Call Options?

LEAP call options—short for Long-Term Equity Anticipation Securities—are call options with expiration dates extending 9 months or longer. They give you the right (but not the obligation) to purchase shares of a stock at a specific strike price before the contract expires.

Unlike short-term trades, LEAPs are designed for long-term conviction. If you believe a company is fundamentally strong and likely to grow, LEAPs give you leverage without owning the stock outright.

Related Term: Wondering how call options work in general? In essence, a call option profits when the stock price rises above your strike price before expiration.

🔍 Why Use LEAPs Instead of Buying Stock?

LEAPs allow you to:

  • Leverage your capital with lower upfront cost
  • Control 100 shares per contract
  • Cap your downside to the premium paid

This makes them attractive to long-term, fundamentals-based investors who still want exposure to growth.

📈 LEAP Call Options Strategy: Step-by-Step

1. Pick a Fundamentally Strong Company

Your LEAP is only as strong as the stock beneath it.

Look for:

  • Consistent earnings per share (EPS) growth
  • Healthy working capital
  • Low debt-equity ratio
  • Strong price-to-book fundamentals

🛠️ Tools like StockQuery or BarChart help screen companies by these metrics.

Keyword: how to pick fundamentally strong companies for LEAPs

2. Choose the Right Strike Price

This is where things get interesting.

  • Deep In the Money Call Options: Strike price is far below current stock price. Safer, more expensive. Look for delta 0.80 or higher.
  • At the Money: Strike price ≈ current stock price. Balanced risk/reward.
  • Out of the Money: Strike price above current price. Cheaper, higher risk.

🔍 What is a strike price? It's the price at which you can buy the stock if you exercise the option.

🎯 Pro Tip: Use BarChart resistance levels to select a strike above the 3rd resistance for OTM plays.

Keyword: best strike price for LEAP call option, strike price above resistance for LEAPs

3. Pick a Long Expiration Date

Typically, 12 to 24 months out. This gives your thesis time to play out and reduces the impact of time decay.

📅 LEAPs are ideal for long term options strategy investors, not day traders.

Keyword: what happens to LEAP options at expiration

🔄 Real Example: LEAP Call Options on AMAT

  • Stock: Applied Materials (AMAT)
  • Current Price: $120
  • Strike Options:
    • $100 (Deep ITM, delta 0.82): ~$24.50 premium
    • $130 (OTM): ~$9.00 premium

Scenario: If AMAT reaches $150

  • $100 Strike: Intrinsic Value = $50, Return ≈ 2x
  • $130 Strike: Intrinsic Value = $20, Return ≈ 120%+

Keyword: leap call options example

🧯 How to Exit and Manage Risk

When to sell LEAP call options:

  • When stock nears take profit price
  • Before time decay accelerates (last 90 days)
  • At resistance levels using BarChart

Loss Mitigation:

  • Set a retreat price to preserve capital
  • Use exit price logic to control emotional trading

Keywords: how to exit a LEAP call option trade, managing risk with LEAP calls, LEAP options loss mitigation strategy

⌛ Timing: Red Days, Quadruple Witching & LEAP Buys

Serious traders time their entries on:

  • Red days (market dips = cheaper premiums)
  • Quadruple Witching Fridays (March, June, Sept, Dec) – High volatility means big opportunities

Keywords: why buy LEAPs on red days, how quadruple witching affects LEAP options

🛠 Tools: Use BarChart for Strike Selection

BarChart’s cheat sheet and pivot resistance levels show:

  • 1st/2nd/3rd resistance levels
  • Suggested strike price zones
  • Price targets for take profit or retreat

📊 Bonus: Try “LEAP call options calculator for AAPL” to model trade scenarios.

🗂️ Quick FAQ

✅ What’s the best delta for LEAP call options?

Aim for 0.80+ for Deep ITM. It means your option gains $0.80 for every $1 the stock moves.

✅ LEAP options vs. buying stock — which is better?

LEAPs offer leverage and risk control. Stocks offer dividends and ownership. Use LEAPs when you want upside with less capital.

✅ Best time to buy LEAP options?

On red days or during quad witching, when premiums dip and fear is high.

Final Takeaway

LEAP call options aren’t just for traders — they’re powerful tools for long-term investors who want to:

  • Maximize upside
  • Limit downside
  • Invest in conviction plays without tying up all their capital

Use this strategy to build a LEAP stable, one fundamentally sound company at a time — and ride your thesis into the future.

Ready to apply what you’ve learned? Start with your top 3 favorite stocks and pull up their resistance levels on BarChart. You’ll know what to do next.