Tip #7:

LEAPs Tilt the Odds in Your Favor

The best stocks to buy are those that are undervalued. And when you combine an undervalued stock with an undervalued LEAP, your chances of profit are much greater.

You can use a stock’s earnings estimates to help you determine the value of the shares its options. Multiply the consensus earnings estimate for the stock by its current price-to-earnings ratio to arrive at a projected stock price when your LEAP expires. If this price projection is above the breakeven stock price, you have found an undervalued LEAP, so you profit from the price difference and if the stock rises!