Long LEAP Calls for the Recovery

Since the recovery is currently under way, one profitable approach is to buy LEAP Calls that fit the following criteria:

Stock Selection

1. Industry poised for recovery, e.g. banks, home builders
2. Stock doing well for the industry
3. Next quarterly results > 1 mo away
4. EMA in a rising trend and MACD leading EMA
5. RSI is not overbought
6. Above recent resistance
7. Check headlines and company announcements

Timing
When there is a broad, steep sell-off that affects all stocks, good or bad, jump on previously identified gems that have seen their LEAP call prices fall.

Option Selection
Buy LEAPS 1.5+ years away (now, Jan 2011), that are 2-3 levels OTM, and whose price < $2.00.