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Am i the only one who trade ditm leaps call with etf?
Investor summaryBullish
User shares strategy of using ITM LEAPS on ETFs (SOXL, SMH, QQQ) for diversified leverage and asks for exit timing advice.
Bull points
- Using ITM LEAPS on broad ETFs provides leveraged exposure while mitigating single-stock idiosyncratic risk.
- The strategy allows for capital efficiency by tying up less cash than buying underlying shares outright.
- Diversification across tech-heavy ETFs captures sector momentum without betting on one specific company's execution.
Bear points
- LEAPS are subject to time decay (theta), which can erode value if the market moves sideways or slowly.
- Leveraged ETFs like SOXL suffer from volatility decay and compounding errors, making them poor long-term hold vehicles.
- Exiting near expiration limits flexibility and may force realization of losses if the timing doesn't align with market peaks.
Post body
Like dram, smh, qqq? In this way I gain higher risk diversification, without needing to invest one correct stock like msft I have bought since Jan and it hasn’t been doing well. Luckily I have invested in those booming etf like dram and smh with ditm leaps call too. holding them just like holding stock shares (of course with a little leverage). But with enough cash on hand I’m not fear at all with the market volatility.
My question is, buying ditm leaps like this, when would you sell it? Or just sell it when it almost expires (like 7tde) given I don’t want to exercise it?
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