In this interview, Ravish Ahuja explains how he uses selling LEAPS to generate consistent income across different market conditions, sharing both the mechanics and the mindset behind the strategy.

Watch Ravish explain his selling LEAPS strategy

Ravish Ahuja

Ravish Ahuja is an experienced full-time options trader based in New Jersey, USA, with nearly a decade of market experience. He focuses on theta-based strategies and has executed hundreds of trades, sharing many of his approaches through his own YouTube channel.

• Options with Ravish on YouTube
• Ravish Ahuja: Two low-risk options strategies you need to know
• Ravish Ahuja: Double Calendar spreads

LEAPS = long-term options

LEAPS stands for Long-Term Equity Anticipation Securities. These are options contracts with expiration dates one year or longer into the future.

While many traders use LEAPS to buy long-term exposure to stocks, this strategy focuses on the opposite approach: selling LEAPS to collect premiums and generate income over time.

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How Ravish sells LEAPS

In the interview, Ravish breaks down his practical mechanics of selling LEAPS.

Entry: timing, stock selection, and strike choice

Ravish typically enters trades after a 10–20% pullback, either in the broader market or in individual stocks. His focus is on:

• Strong, profitable companies
• Stocks he is comfortable owning long-term
• Situations where the sell-off may be stabilizing

For strike selection, he usually sells puts around 15–20 delta and expiring in one year. He tries to balance:

• Premium received
• Downside protection
• Desired entry price for the stock

He also asks a simple but powerful question:
“At what price would I be happy to own this stock?”

That price often guides the strike selection more than any single indicator.

Position structure: premium and downside protection

By selling long-term puts (typically around one year out), Ravish collects a large upfront premium.

This creates two advantages:

• Lowers the breakeven price
• Provides 20–30% downside protection in many cases

This is why the strategy can remain profitable even if the stock declines moderately.

Exit: when to take profits

Ravish does not always hold trades to expiration.

Instead, he often takes profits when:

• 25–30% of the premium is captured
• The return on margin becomes attractive in a short time

In some cases, trades can reach these levels within weeks, allowing him to:

• Close early
• Reallocate capital into new opportunities

If the trade moves more slowly, he is comfortable holding for several months or even the full year.

Management: mostly hands-off

One of the defining features of selling LEAPS is the minimal management required.

Ravish describes it as close to “set and forget,” with two main approaches:

• Let the trade play out
• Use a stop-loss, often around 2x the profit target

In a worst-case scenario, he is prepared to:

• Take assignment
• Hold the stock long term
• Potentially sell calls against it later

Importantly, he emphasizes that many trades may experience drawdowns before becoming profitable—similar to owning stocks.

Using leverage (advanced approach)

Ravish also uses margin to sell puts with lower capital requirements.

This can significantly increase returns on capital, but comes with added risks:

• Expanding margin requirements
• Potential liquidation during sharp downturns

Because of this, he stresses:

• Keeping cash reserves
• Avoiding over-leverage

How the strategy can profit in any market

One of the most compelling aspects of selling LEAPS is its flexibility across market conditions.

According to Ravish, the strategy can:

• Generate profit if the market goes up
• Still earn income if the market stays flat
• Even remain profitable if the market declines within a certain range

This is possible because the trader collects a large upfront premium, which lowers the breakeven price and provides built-in downside protection.

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Why selling LEAPS can outperform shorter-term strategies

Many retail traders focus on weekly or monthly options. However, selling LEAPS offers a different set of advantages, according to Ravish:

1. Larger upfront premium

Selling long-term options provides a lump sum payment, compared to smaller recurring premiums in short-term strategies.

2. Less active management

This is often a set-and-forget approach, requiring minimal monitoring.

3. Potential tax advantages

In some cases, holding positions for over a year may offer more favorable tax treatment, depending on the jurisdiction.

4. Reduced timing pressure

Because of the long duration, traders don’t need to precisely time short-term market movements.

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Risk management and key considerations

While selling LEAPS has attractive features, it is not risk-free. Key risks include:

Margin risk

If using leverage, margin requirements can increase rapidly during market downturns, increasing the risk of liquidation.

Market crashes

Severe drawdowns can push stocks far below strike prices, especially in extreme environments.

Assignment risk

Traders must be willing to own the underlying stock if assigned.

Position sizing

Maintaining sufficient cash reserves is essential, especially when using margin.

Results from selling LEAPS

Ravish shares that he has used this selling LEAPS strategy across hundreds of trades over several years, with only a handful of losing trades so far. In many cases, he notes that even the losing trades could have turned profitable if held longer.

He also highlights that he has never been assigned on any trade. While he does not provide a precise annual return – since this strategy is used on a portion of his portfolio – he emphasizes that it is primarily designed to enhance overall returns, with some trades generating 30–50% returns on margin relatively quickly, and in certain setups even higher.

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Combine income with long-term investing

Selling LEAPS is a powerful strategy for traders looking to combine income generation with long-term investing.

It stands out because it:

• Works across different market conditions
• Provides built-in downside protection
• Requires minimal day-to-day management
• Can enhance returns when used responsibly

For intermediate options traders, this strategy offers a compelling alternative to more active approaches, especially for those seeking consistency and scalability.

If you want to better understand the mechanics and real-world application of selling LEAPS, this interview with Ravish Ahuja is a great place to start.

Frequently Asked Questions (FAQ): Selling LEAPS