What Are LEAPS Options?
Welcome back to Market Moves Matt’s series on my LEAP (long-term) options picks! The leap option is an interesting strategy to consider if you want more leverage when it comes to investing in stocks. Let's see if leap options can make me filthy rich for the next year. I'm going to be buying leap options on my favorite stocks every single week. This week, we're buying leap options on a brand new stock, so inside this blog, I'm going to tell you the opportunity at hand, as well as the options I've already purchased.
Growth Stocks Still In A Downtrend
If you have been following this series, you have seen my previous purchases for leap options. The Leap options on FUBO that I bought last week are down about 40% which is a $1,000 loss for me. I did purchase an expiration of Janaury 21'st 2023 so there is still plenty of time before expiration.
Today I will be reviewing my final leap option and when I plan to buy some leap options again. I have gone against my own personal trading rule, and this is a real life example of going against your own trading rules and losing money as a consequence. I bought in the red and yellow clouds, which typically means there is a continuation of the stock going lower. When you see these clouds, it is hard to determine the bottom of where to buy. A signal for change is seeing a blue and green cloud, or a blue and yellow cloud. I personally witnessed the effects of yellow and red clouds continuing downtrend in going against my own rule and buying bearish with Poshmark , Neo, and Upwork.
I may buy more leap options later in the year when the clouds finally flip. However, the clouds may never flip and these growth stocks may stay beaten down for a long time.
My Final Leap Option
My final leap option and the position I will be entering this week is ARK. This disruptive and innovative technology ETF is owned by Cathy Woods. I have been a fan of this ETF for a while and you've probably heard me talk about it on youtube or in my podcast.
If you are looking at the chart, you can see I bought yellow and red again! After this, I said I will not do this mistake again. It is often a sketchy and risky move buying in the red and yellow clouds. However, you do see an insane hammer candle on the ARK ETF with insane volume. As previously mentioned about red and yellow candles, it is hard to know if this is the bottom. We need to wait for key confirmation of green clouds. Once we see green and yellow that is the possible bottom and green and blue clouds are the actual bottom.
True Disrupting Industries
A reason I love this pick so much is that an ETF has multiple stocks it reflects so if one category were to crash, ideally the others would prevent the rest of the ETF from dropping. As you can see, the highest investment category is around 13% which is not a large sum and there is plenty of diversification in other technology categories I believe in.
The ARK ETF focuses on disrupting industries as listed above. In the past ten years, we have seen these industries start to grow, and I believe in the next 10 years we will see them really change solutions to the way we live our daily lives. For example, we've already seen the boom in e-commerce and the retail shopping downtrend as a consequence of e-commerce disrupting the way people had traditionally shopped.
Disrupting Technology is something I really believe in. As you can see Tesla, TeleDoc, and Zoom are some of the larger holdings for this ETF. The stocks have been well established, successful, and disrupted industries.
ARK is an ETF I really believe in and am interested to see how it does over the span of my one-year-long leaps. I did buy with red and yellow clouds so it may be still in a downtrend.
There is no bullish confirmation so I will be taking a break from leaps. We may see a flip in the market in March or April. Stay tuned to see updates.
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