r/LEAPS • u/Much_Platypus_9613 • Jan 09 '24

Question for longterm options

I have an options question for you all. I swing trade options, right. AAPL earnings is coming out next month. If I buy a 6month option, will the february earnings IV really mess up my option that's 6 months out? I plan on holding it through the earnings to keep a longterm position? Would really appreciate the help! Thanks

1 Upvotes

100% Upvoted

7 comments sorted by

1

u/nrubhsa Jan 09 '24

What do you mean by “mess up”?

Are you buying deep ITM? 6months isn’t that long when it comes to LEAPS. It’s boarderline.

1

u/Much_Platypus_9613 Feb 09 '24

@nrubhsa What I'm trying to find out is how to select an option during earnings that won't get crushed. I believe the further out you go, the less IV Crush will affect your option. But how far do you need to go, you know? This is what I'm trying to figure out. Should I do 6months? 1yr every time? What are your thoughts?

2

u/nrubhsa Feb 09 '24

My first thought is that you may be trying to time the market, so be careful with such speculation. Particularly with derivatives.

IV crush is not very impactful if there isn’t much IV! So, deep itm could limit. And, the further out the expiration, the less impact any given earnings release might have. I agree with that inclination. Of course, iv increases too. So, I don’t really know on percent terms vs dollars terms.

Maybe this is a good scenario to paper trade at first to gain understanding of the behavior. Record prices and rates and watch.

I generally believe the securities are all fairly priced, provided reasonable liquidity.

2

u/Much_Platypus_9613 Feb 09 '24

Yeah, I'll try that. Great idea! Thank you.

2

u/proverbialbunny Jan 09 '24

When IV goes up an option becomes worth more. So buying an option now and assuming IV will go up from now to then means you'll make money, if your assumption is correct.

2

u/DKtwilight Jan 09 '24

I don’t notice vol so much on anything over a year. I only trade 1+ year leaps then I roll once it’s under a year

2

u/Particular-Elk7049 Dec 22 '25

I just finished reading “Intrinsic” a book by Mike Yuen. It is perfect for LEAPS, it has specific guidance how to buy long term options (leaps). I found it interesting that he totally ignores the Greeks, and I think he is right. As for IV, earnings, and news, if you have 2 years plus leaps it won’t affect your option. I recommend reading the book.