Currently 10% of my portfolio is in **deep ITM LEAPS** of stocks that I am above-moderately bullish on for the next year+. I have come to the conclusion that LEAPS is much better than holding shares when hedging with PMCC/CC. But I need someone to level me down and give me reasons I am not making a sound decision.
**Reasons why I feel like LEAPS is strictly better:**
1. In a bull run, LEAPS will definitely outperform stocks.
2. In a bear run, let's say the stock is already at inflated prices at $100, and a recession can be as huge as 50%. In this case, if I hold shares, my cost basis will be $10,000 with a downside of $5,000. But with deep ITM LEAPS, my premium is probably around $2,000 (generally 20%). So, my potential downside is only my premium of $2,000. This way I am actually protecting my wealth from any drop further than 20% (because 20% of $10,000 is $2,000). I don't lose my LEAPS either and can sit through a rebound. So, LEAPS will outperform stocks in a sudden recession.
3. In a stagnant/slightly bullish/slightly bearish market, I can sell PMCC's with LEAPS at 0.1 deltas and safely collect income. So, LEAPS will still outperform stocks in such a market.
*Actually, I can - and I will - also sell PMCC's in all phases of the market because selling PMCC's is premium-profitable for me in two of the three scenarios above.*
4. Right now, I am 80% in VOO, 10% in **stock A**, and 10% in some LEAPS. If I were to buy LEAPS for **stock A,** not only will I benefit from the above points for **stock A**, but it is actually much less capital intensive and that means I can invest \~88% into VOO due to the capital savings of not holding shares.
This is now my huge conundrum, and I am really trying to stress-test my decision not to go full LEAPS on non-VOO stocks. I need your help. Any advice for me?