The increasing demand in data rates and new emerging applications require that the future generation of satellite networks will be designed at sub-THz frequencies with ultra-broad bandwidth. At such frequencies, the satellite channel is impaired by the highly frequency dependent absorption of the signal by the gaseous atmospheric media besides the thermal noise from the sky, the ground, receiver circuit and molecular absorption noise thus, making it a highly frequency-selective channel. In this work, we derive a theoretical upper bound on the channel capacity of a LEO satellite communication link by optimizing the power spectral density (PSD) of the transmitted signal considering the physicla aspects of THz channel. We obtain a closed form expression of optimum transmitted signal PSD that maximizes the channel capacity of LEO satellite link as the elevation angle changes with the transmitted power held constant.