This video by Berkshire Hathway’s Charlie Munger is a bit technical, but worth watching over and over.
The Goose’s Risk Classification Index.
Level | Pros | Win-To-Loss Ratio | Description |
|---|---|---|---|
 Low Risk | Leap ITM | 80/20 | In the Money (ITM) leaps are options with an expiration date greater than 1 year and the stock price is less than the option strike price. More time equals less risk. |
 Medium Risk | Leap OTM | 60/40 | Out of the money (OTM) leaps are options greater than 1 year, but the stock price is greater than the strike price. This offers zero intrinsic value, greater upside and slightly greater risk. |
 High Risk | Non Leap | 40/60 | A non leap is an option that would expire in less than 1 year and could be ITM or OTM. This varies of the level of risk. ITM would have less risk than OTM. |
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