Every Saturday, I answer questions from readers.

They’re real questions about real money.

If you’ve emailed recently, look for your question below.

First: An Important $50,000 Top Trader Challenge Update

April is officially in the books, which means the $50,000 Top Trader Challenge is over.

Now comes the important part.

We’re finalizing the results. That means double-checking the leaderboard, contacting the winners, and confirming everything with our legal team before making it official.

I know everyone’s eager to see how it shook out.

Results will be released Monday!

How do I pick a future date to use for a LEAP? Is there a formula? – Valerie

Great question, Valerie. I’ll link my article on LEAPS here so people have some context.

There’s no exact formula. But there is a simple way to think about it.

Start with your thesis and ask yourself how long it will realistically take to play out. Then give yourself extra time, because stocks rarely move on your schedule.

At the same time, you have to consider price. The longer the expiration, the more expensive the option. So you’re always balancing more time (which increases your odds) with cost (which impacts your returns).

In general, I like to go out 1–2 years, depending on the setup, but only if the premium still makes sense relative to the upside.

LEAPS are a good idea unless someone exercises that option and you don’t own the stock. Gotta be very careful owning naked calls and allowing it to run like that. – James

Hey, James. I believe you’re thinking about selling options, not buying them.

When you buy a LEAP call, you’re not “naked” and you can’t be forced into anything. No one is going to exercise against you and make you deliver shares.

That risk only exists if you’re selling calls – especially naked calls.

When you’re the buyer:

• Your max loss is the premium you paid

• You’re never forced to buy or sell shares

• You’re in control of the position

So there’s nothing to “be careful of” in that sense.

The real risk with LEAPS isn’t assignment. It’s being wrong on the stock or the timing.

I just have to give credit where credit is due. This is a great write-up on LEAPS! I’d probably take it one step further, though. Instead of buying an at-the-money LEAP, I usually go 10%, 15%, or sometimes even 20% higher. This helps save on time value premium, and it may allow you to buy an additional LEAP – giving you control of 200 shares instead of 100. – Dave

Great point. I think that’s a really smart way to approach it.

Although you’re not asking a question, I still wanted to share this with everyone because it’s a great insight.

Going slightly out-of-the-money can lower the premium and, like you said, let you control more shares.

The tradeoff is you’ll just need a bigger move for it to work.

Keep the great emails coming, Dave.

Can I purchase LEAPS through my regular Schwab option account? – Dale

Yes! LEAPS are just longer-dated options.

I recently started trading LEAP spreads while selling put options to essentially get in the trade for free. When looking out over a year, a $25 spread costs maybe $2 or $3. You can generally recoup that by selling a 2 or 3 month put, way out of the money. – Brett

Now we’re talking, Brett. This is a bit more advanced than I like to talk about in this newsletter (because I’ve got investors of all skill levels here.)

But buying LEAPS while simultaneously selling puts is a great way to reduce your up front cost – because you’re earning income from selling the puts.

There’s more risk involved here, of course. This brings assignment risk into the equation that James mentioned above.

But over a long time horizon and with a high-quality underlying company, I like the strategy.

Hello Davis. I’ve been interested in selling covered calls against leaps. My question is what happens to the leap if the covered call expires in the money and is exercised? Since you don’t actually own the shares, how does the call buyer obtain the 100 shares and what is the max loss on the leap option? Thanks. – Mike

Hey, Mike. What you’re describing is often called a poor man’s covered call (long LEAP + short call).

If your short call expires in the money and gets exercised, you’re assigned. That means you’re obligated to deliver 100 shares.

Since you don’t own the shares, your broker will typically do one of two things:

• Exercise your LEAP to get the shares and deliver them

• Or close both positions (sell your LEAP and buy back the short call)

In practice, most people just roll or close the short call before expiration to avoid assignment altogether.

As for risk:

• Your max loss on the LEAP is always the premium you paid

• When you add a short call, your LEAP acts as coverage, but if the stock moves sharply, you can still take losses depending on strikes and timing.

I hope this helps.

Any news on Fannie Mae? Are they actually moving on the change over or is it shelved for now? – David

Hi, David. Nothing major has changed.

Fannie Mae is still in conservatorship, and while there are ongoing discussions about a release, the timeline keeps getting pushed out.

But that’s usually when these setups get interesting.

When everyone’s talking about it, it’s often too late.

When nobody’s talking about it… that’s usually the time to buy.

Important Update: Follow The Million Mission on Twitter/X

Big news: I just launched a Twitter/X account so you can follow along with The Million Mission in real time. If you want quicker insights, early reactions to breaking news, and a closer look at how I’m navigating the road to $1 million – this is where I’ll be.

Come hang out, ask questions, and follow the Mission as it happens @DavisPWilson.

Another Important Update: The Million Mission website is live!

I’ve gotten plenty of feedback regarding where to find previous alerts. Well, The Million Mission website is finally live and you can check out archived alerts here.

Portfolio Overview

Here’s what I’m currently holding in The Million Mission portfolio:

Fannie Mae (FNMA) – 2,500 shares @ $7.25/share

Uber Technologies (UBER) – 200 shares @ $80/share

Nvidia (NVDA) – 200 shares @ $179/share