How much QQQ exposure do you actually have?
The concept
A LEAPS call with a delta of 0.80 behaves roughly like owning 80 shares of QQQ for small price moves. Ten contracts at that delta is about 800 share-equivalents. The capital you paid is not the same as the exposure you carry, and that gap is where leverage becomes dangerous.
A delta budget
Instead of asking "How many contracts can I afford?", set limits like these:
- Target exposure: what share-equivalent QQQ exposure fits your portfolio and how much drawdown you can tolerate.
- Net delta: long LEAPS delta, minus short-call delta, plus short-put delta. Remember that a short put adds long exposure.
- Combined technology exposure: QQQ and SMH tend to fall together, so count both against one combined budget.
- Premium at risk: the total you could lose if the long options expired worthless.
Get 30% off a one-year TradeMind subscription
Every address that received this newsletter already carries 30% off. Log in with that address and the discount applies to your first annual term automatically. Offer terms
A worked frame
Say your portfolio would have the equivalent of 100% QQQ exposure at full allocation. A disciplined framework then sets a ceiling, a normal range and a defensive floor, and lets the regime model move exposure between them. The model adjusts exposure inside fixed limits. It never removes the limits.
TradeMind application
TradeMind tracks net delta, short-put exposure and combined QQQ and SMH exposure as one number. That way, a premium overlay cannot quietly push total risk past its ceiling.
Strategy Integrity Check
Ask: "If QQQ falls 20% next month, what is my estimated loss across all positions together?" If you cannot answer within a few seconds, you are not budgeting delta.
