LEAPS - Identifying the First Sell Point

This is when you want to sell a secondary call. The first sell point of a new cycle is always preceded by a minimum of two bottoms and one top according to Hooper and Zalewski in their book, Covered Calls and LEAPS, a Wealth Option.

In a rising cycle you will see a break through of the top of a declining cycle. You will see higher bottoms. The first sell point is preceded by a minimum of two bottoms and one top. In a declining cycle, you will see the break through of the bottom of a rising cycle and then the first sell point is preceded by a minimum of two bottoms and one top.

It is very important to pay attention to these indicators when selling secondary calls under the LEAPS technique since you are leveraged in the positions and optimization is therefore highly important.