A Long-Term Bullish Options Strategy: LEAPS
Core QQQ LEAPS setup
- Starting capital: $100,000 (or the same proportions)
- Underlying: QQQ (Nasdaq-100 ETF)
- Expiration (DTE): 650–800 days (2-year LEAPS)
- Strike selection: Delta 0.8 (deep in the money)
- Allocation: 60% long options | 40% cash reserve
- Entry: start the first position when QQQ drops > 1% on the day
Three core management modules
1. Infinite refill (Roll Out) — maintaining time
- Trigger: price is calm or choppy, but remaining time DTE < 300 days.
- Goal: stay out of the theta-decay acceleration zone (the “death zone”) and keep a “permanent renewal.”
- Action: sell the current contract, buy back a new one with DTE 700+ (keep Delta inside 0.9).
- Effect: pay a small debit in exchange for unlimited survival time.
2. Harvesting profits (Roll Out & Up) — locking in gains
- Trigger: QQQ keeps rallying, and the held contract’s Delta rises above 0.9.
- Goal: cut leverage, realize paper gains, refill the cash reserve.
- Action: sell the high-Delta contract, buy a further-dated (DTE > 650) and higher-strike (Delta back to 0.7–0.8) new contract.
- Effect: bring cash back (credit), lower position pressure, keep the long exposure.
3. Counter-trend sniping (adding in a bear) — the add rule
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Preconditions:
- Cash reserve > 10% of the book.
- More than 30 days since the last add (cooldown).
- The LEAPS is in the red, or Delta has fallen.
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Add modes:
- Heavy mode: when cash > 40%, spend 10% of the book in cash on a new contract.
- Standard mode: when 10% < cash < 40%, spend 5% of the book in cash on a new contract.
Strategy logic
| Market | Action | Goal |
|---|---|---|
| Strong rally | Roll Up | Lock paper gains, cut leverage, refill cash |
| Sideways | Roll Out | Spend a little cash to buy more time |
| Slow grind down | Wait (cooldown) | Stay patient; do not add blindly |
| Crash | Heavy snipe | Use the 40% cash pool to pick up chips lower and average down hard |
Executables
Before the first position
The account is 100% cash.
When QQQ drops ≥ 1% on the day, start building.
Action: spend 60% of the book on QQQ LEAPS calls, keep 40% in cash.
Contract requirements: DTE between 650 and 800 days, Delta as close to 0.8 as possible, deep ITM calls.
If 60% of capital is not enough to buy at least 1 contract, do not start. Wait for the next QQQ down day ≥ 1%.
After the first fill, record that day and treat it as the first “add day” for the 30-day cooldown.
After the first position
Check once after the close each day, in this priority order:
- First, whether profits need harvesting
- Then, whether time needs rolling
- Last, whether a bear-market add is allowed
- If none of those fire, keep holding
Case 1: after a rally, Delta > 0.9
Trigger: any held QQQ LEAPS call has Delta > 0.9.
Action: Roll Out & Up.
Specifically: sell that old Delta > 0.9 contract, buy a new QQQ LEAPS call.
New contract: DTE > 650 days, Delta back around 0.7, strike higher than the old one.
Target: this roll should preferably produce a credit — proceeds from selling the old contract exceed the cost of the new one.
Purpose: lock some paper gains, cut leverage, refill cash, keep the long QQQ exposure.
If you cannot find a new contract that meets the rules and produces a credit, do nothing. Hold and check again next session.
Case 2: DTE < 300, but Delta has not gone above 0.9
Trigger: any held QQQ LEAPS call has DTE < 300 and Delta ≤ 0.9.
Action: Roll Out.
Specifically: sell the old contract, buy a new long-dated QQQ LEAPS call.
New contract: DTE ≥ 700 days, Delta back around 0.8.
Target: a debit is allowed — you may pay to extend.
Purpose: keep the option out of the accelerated decay zone and put it back into long-dated LEAPS status.
If cash cannot cover the roll cost, skip it. Hold and check again next session.
Case 3: bear decline, Delta < 0.5
All three must hold:
Condition 1: any held QQQ LEAPS call has Delta < 0.5.
Condition 2: cash reserve > 10% of the book.
Condition 3: more than 30 days since the last add.
Only if all three are true is a bear add allowed.
If any one fails, do not add. Keep holding.
Case 4: bear add when cash ≥ 40%
Trigger: all “bear decline, Delta < 0.5” preconditions are met, and cash ≥ 40%.
Action: heavy mode.
Specifically: spend 10% of the book in cash on a new QQQ LEAPS call.
New contract: DTE 650–800 days, Delta as close to 0.8 as possible.
After the fill, record that day as the new “last add day” and restart the 30-day cooldown.
Case 5: bear add when 10% < cash < 40%
Trigger: all “bear decline, Delta < 0.5” preconditions are met, and cash is between 10% and 40%.
Action: standard mode.
Specifically: spend 5% of the book in cash on a new QQQ LEAPS call.
New contract: DTE 650–800 days, Delta as close to 0.8 as possible.
After the fill, record that day as the new “last add day” and restart the 30-day cooldown.
Case 6: Delta < 0.5, but cooldown is not over
Trigger: any LEAPS Delta < 0.5, but ≤ 30 days since the last add.
Action: do not add.
Purpose: avoid stacking adds in a continuous decline and burning cash too fast.
Case 7: Delta < 0.5, but cash ≤ 10%
Trigger: any LEAPS Delta < 0.5, but cash ≤ 10%.
Action: do not add.
Purpose: keep a minimum cash cushion; do not go fully invested and just take the hit.
Case 8: QQQ sideways or small chop
Trigger: no LEAPS with Delta > 0.9, none with DTE < 300, none with Delta < 0.5.
Action: no trade, keep holding.
Purpose: avoid pointless rolls, extra costs, and sloppy mistakes.
Case 9: QQQ grinding down, but Delta has not broken 0.5
Trigger: QQQ is down, but every LEAPS still has Delta ≥ 0.5.
Action: do not add, keep waiting.
Purpose: only fire the bear-add rule once the LEAPS is clearly hurt and Delta has broken 0.5.
Case 10: several LEAPS hit different rules at once
Fixed order:
First, handle Delta > 0.9 contracts: Roll Out & Up.
Second, handle DTE < 300 and Delta ≤ 0.9: Roll Out.
Third, check whether any Delta < 0.5 exists, and whether a bear add is allowed.
Why: Delta > 0.9 is profit management after a rally; DTE < 300 is time-risk management; Delta < 0.5 is the bear-add signal. Do not mix the three.