Why I Like LEAPS as a Stock Alternative

Stock vs. LEAPS: A Real Example with NVDA

Earlier this week, I said I’d write a post explaining the difference between owning stock and the alternative—owning LEAPS options. So here it is.

Before we dive in, it’s important to remember that I’m a trader, not a buy-and-hold guy. I have nothing against buying and holding stock—I do it with some positions—and many investors have become millionaires simply by investing in stocks. Ultimately, we all find our preferred method and just try not to make too many mistakes along the way.

Now, before I explain why I often prefer LEAPS options over buying stock, let’s quickly define a few key terms: LEAPS options, stock alternatives, Delta, and Return on Investment (ROI).

What Are LEAPS?

LEAPS (Long-term Equity Anticipation Securities) are just like regular monthly or weekly options, except their expiration dates are more than one year out—up to three years. LEAPS give investors different ways to trade, hedge, or invest in the market over a longer time frame than standard options.

Stock Alternative

When I want long-term exposure to a stock, I often choose to buy LEAPS instead of the stock itself. By purchasing LEAPS call options, investors can profit from a stock’s price increase while committing far less capital than buying 100 shares outright.

If the stock price rises above the LEAPS strike price, the holder can either exercise the option to buy shares below market value or simply sell the LEAPS in the open market for a profit.

Delta

Whether you’re a beginner or already a seasoned options trader, you may have heard about the “Greeks” but you may not know exactly what they are or what they can do for you. If so, read my page that explains what these “Greeks” mean and how to use them to better understand the price of an option.

If you’ve heard about “the Greeks” in options trading, Delta is usually the first one to understand.

Delta measures how much an option’s price is expected to change for every $1 move in the underlying stock. For example, a Delta of 0.40 means the option should gain about 40¢ for every $1 the stock increases ($40 with 100 shares).

Delta is very important to me when buying LEAPS. If I own 100 shares of stock and it goes up by $1, my position gains $100. But if I buy 1 LEAPS contract instead (which controls 100 shares), Delta tells me how much the option will increase with each $1 move in the stock.

Return on Investment (ROI)

ROI measures how profitable an investment is. It tells you how much you’ve earned (or lost) compared to what you invested.

A Real Example: Nvidia (NVDA)

Now that we’ve defined the key terms, let’s walk through a real trade from May 27, 2025, when Nvidia (NVDA) was trading at $135 per share.

Investor 1: Buys 100 Shares of NVDA

Investor 2 (me): Buys 2 LEAPS Contracts

I bought 2 contracts instead of 1 so that my Delta exposure would be closer (or more) to owning 100 shares. Each LEAPS contract cost $3,585 (100 × 35.85), so two contracts cost $7,170. With a Delta of 0.66, my position gains about $132 for every $1 the stock rises—compared to $100 if I owned the shares outright.

Fast Forward to Today

As I write this, NVDA is trading at $174. That’s a $39 gain per share since May 27.

Investor 1:

Investor 2:

Final Thoughts

Investor 2 (me) invested less capital, made more money, and had a significantly higher ROI. This is why, as a trader, I often choose LEAPS over buying stock. The leverage, combined with long-term exposure and strategic Delta positioning, can offer a better return—if the trade works in your favor.

I hope this short explanation makes it clear why I like LEAPS. If you have any questions please send me a message.

📈Successful trading,

Steve

The Options Coach