5 LEAPS Options I’m Buying NOW (Huge Opportunity)

Summary

The presenter discusses five stocks for long-dated call options (LEAPS): Alphabet/Google, Applied Optoelectronics (AAOI), Amazon (AMZN), Netflix (NFLX), and Vistra (VST). His general approach is to use calls with substantial time to expiration, often targeting a delta near 0.70, and to sell before the final months of the option’s life, when time decay can accelerate. The trades are presented as his plans or ideas; not all are completed purchases.

Options Framework and Portfolio Approach

• A LEAPS option is a long-dated call. The presenter’s “DEEP” approach generally targets an in-the-money call with roughly 0.70 delta, as a leveraged substitute for owning 100 shares.
• He illustrates the leverage by comparing the option premium with the cost of buying 100 shares. The option is less expensive upfront, but its value is affected by the stock price, time decay, and option-market liquidity.
• He generally does not plan to hold options to expiration. He expects to exit after several months—often around June or July—or before the final 1–3 months, when theta decay may become more significant.
• He says a call can gain value before the share price reaches its expiration breakeven because its value responds to changes in the stock price and its delta.
• Several quoted options have relatively wide bid–ask spreads. The presenter also notes volatility and low trading volume in some cases.

Stocks and Proposed LEAPS

Alphabet / Google (GOOGL)

• Business and thesis: The presenter sees Alphabet’s search, Chrome, Android, YouTube, Gmail, Maps, Workspace, Google Cloud, Gemini, and in-house TPU chips as a broad distribution and infrastructure advantage in AI. He argues that these assets and Google’s advertising business could help it adapt as AI changes search.
• Concerns: Alphabet fell about 13% after its Q3 report, according to the presenter. He cites search revenue below Wall Street expectations, very large AI-related spending on data centers, infrastructure, and chips, and pressure on free cash flow. He also flags the risk that AI assistants could take share from traditional search.
• Valuation view: He sees $350 per share in 2027 as a reasonable value. He compares the recent decline with a prior fall to about $273 in March, which he views as a possible analogy for a rebound.
• Option example: December 17, 2027 expiration, $270 strike, delta about 0.65, premium about $54 per share (about $5,400 per contract), and breakeven near $322. He says he would aim to exit around June or July 2027 rather than wait for expiration.
• Position disclosure: He says he has invested more than $1 million in Google and refers to being “short” on the stock, though the exact meaning of that statement is unclear in the subtitles.

Applied Optoelectronics (AAOI)

• Business and thesis: AAOI makes optical transceivers, lasers, and related equipment used to move data through data centers, broadband, telecom, and fiber networks. The thesis is that larger AI data centers need faster connections, including 800G and later 1.6T products.
• Operating figures cited: Q2 revenue was about $192 million, up 86% year over year; data-center revenue was about $108 million, up 140%. The presenter says 800G revenue more than doubled in the prior quarter and that demand for 800G and 1.6T products could exceed production capacity by mid-2027.
• Capacity and orders: He cites current production capacity approaching 200,000 units per month, a target of roughly 650,000 units per month by the end of 2026, and nearly 400,000 square feet of added Texas manufacturing space. He also mentions an order worth more than $200 million for 1.6T products from a hyperscale customer.
• Risks and position: He says the shares had fallen about 30% over both the past month and three months, while roughly doubling over a year. He reports a $9,000 loss on existing calls and says he plans to average down. He characterizes AAOI as a high-risk, high-reward, and highly volatile position, not a stabilizing portfolio holding.
• Option example: He cites a January 21, 2028, $80 strike call while the stock was around $70. This is out of the money and therefore not an example of his in-the-money DEEP strategy. He says the stock might recover to $100 in Q1 or Q2 2027.

Amazon (AMZN)

• Business and thesis: The presenter highlights Amazon’s e-commerce, AWS, advertising, Prime subscriptions, and logistics businesses. He views AWS and AI infrastructure demand as major growth drivers.
• Operating figures cited: AWS Q3 revenue was about $46 billion, up more than 39% year over year, implying an annual revenue run rate of about $184 billion. AWS operating profit was about $17.8 billion for the quarter. Amazon’s total operating profit was $28.1 billion, which he describes as a record operating margin.
• Risks: He cites expected 2026 capital expenditures of about $220 billion, largely for AI infrastructure, and says the spending has weighed on free cash flow. The key question, in his view, is whether those investments will generate sufficient future returns.
• Option example: With the stock around $242, he considers a September 2027 $235 strike call, with delta about 0.63, a premium around $40 per share (about $4,000 per contract), and breakeven near $274. He says he would look to exit around $280 per share or manage the position in June 2027, rather than hold to expiration. He notes the bid–ask spread is wider than he would prefer.
• Position disclosure: He says he owns 2,800 shares, valued at about $679,000.

Netflix (NFLX)

• Business and outlook: The presenter describes Netflix as a potential rebound candidate after a steep share-price decline, despite continued business growth and improving profitability.
• Concerns: He says the shares fell about one-third in 2026 and about 45% from their late-2025 peak. Q3 revenue growth was 12%, the slowest in nearly three years, and the Q4 outlook suggested further slowing. He also says Netflix lowered its 2026 advertising-revenue forecast from about $3 billion to $2.7 billion because ad tools were implemented more slowly than planned. Competition from YouTube, TikTok, social platforms, and games is another risk.
• Financial performance cited: Q3 operating profit increased 37% to $4.5 billion, EPS rose 49%, and operating margin expanded from 28.2% to 34.6%. The presenter says retention is stable and churn improved year over year. He cites a forward earnings multiple of about 18.
• Option example: With the stock described as trading around $62, he considers a September-expiring $55 strike in-the-money call. The premium is about $14.60 per share, putting breakeven near $69.60. He says an earnings surprise could potentially take the shares to $80, possibly by February or March, but this is his speculation. He notes that the option’s trading volume is low.

Vistra (VST)

• Business and thesis: Vistra generates and sells electricity, with natural gas, nuclear, coal, solar, and battery-storage assets. The presenter’s thesis is that electricity availability is a potential bottleneck for AI data centers, and that existing generation assets—particularly reliable nuclear power—could be valuable.
• Option example: He considers a September 17, 2027, $140 strike call, with delta around 0.60 versus his preferred 0.70, and breakeven around $166–$167. He says he believes the stock could be worth more than $180 by expiration, based on his assessment of the electricity shortage, cash flow, and revenue growth. He describes the stock as volatile and says the trade will require active management.

Key Cautions and Disclosures

• The presenter emphasizes that stock-price forecasts and option outcomes are uncertain; his price targets and probability assessments are his personal views.
• He specifically characterizes AAOI as high risk and volatile. He also flags AI-related capital spending and free-cash-flow pressure for Alphabet and Amazon, and competition and slower growth for Netflix.
• LEAPS still carry substantial option-specific risks, including time decay. The presenter also points out wide spreads or low volume for some contracts.
• The presenter says he is not a financial adviser and cannot predict the future. He also mentions offering coaching and a paid Discord community.

Presenter/source: Henry of Invest with Henry; he says he developed his options approach after working at Goldman Sachs.