>>20125799>would the leaps outpace the theta decay of the options?Pic related is an example with SPY. It literally only has to go up 2.1% (over 2.7 years) to break even. The extrinsic/theta/breakeven is only $500 (assuming you get a good fill). Clean leverage no downside.
>would the leaps outperform an L-EFT equivalent of similar leverage? Based on past performance, SSO (2x SPY) will do 1.5x CAGR. So you're taking on 2x risk for 1.5x gains. This is due to volatility drag. Running SPY LEAPS at 2x leverage, it will need to go up 2% or so to breakeven each year. Let's say SPY does 10% this year. SSO does 15%. LEAPS do 18%.
Just buy SSO or QLD if you're going to buy and hold long term. As the volatility drag gets infinitely worse with higher leverage. And look at 200 MA strategy if you're going to trade or use 3x LETFs.
