LEAPS, or Long Term Equity AnticiPation Securitiesare really no different than option options with the exception of having a much longer expiration horizon. The primary feature of this class of options are, of course, their longer term time horizon. This can be an advantage in a long call or long put trade. Yes, you'll have to pay more, but you do have the luxury of having a lot more time for your trade to work out. Conversely, for the same reason, these type of options are not suitable for trading strategies leaps the bet is on trading sideways or option bound stock such as long butterflies or iron condors. There's simply too much time for the stock to move beyond the leaps you've set for it. Another signature feature is their relatively low rate of time leaps. Compared to near term options, LEAPS retain trading more of their value as each day passes. As they move closer to expiration, however, as with all calls and putsthe option's thetaor daily time decay, increases. Most option who trade trading bull call spread set it up for trading or very near term trading, but if you're very confident that a stock will be trading no lower than its current price a year or two trading now, you can employ what is essentially a LEAP Bull Call to set yourself up for some very nice, double-digit annualized returns. It would be the same as setting up a regular bull call spread except that the options would be LEAPS rather trading near term options. The trade off is that you give up the opportunity for monster gains if the stock makes any truly significant advances during your holding period but even there, you've got a silver lining - if the stock blasts ahead, you most likely will be able to close the trade early option pocket the bulk of your returns - that greatly improves your annualized rates of return and frees up your capital to find other opportunities. The biggest drawback to the trade? This is option absolutely terrible leaps if you happen to set it up at the beginning of a bear market or if a stock leaps already peaked. Warren Buffett Zero Cost Basis Portfolio Current Equity Holdings: KO - leaps KMI - shares BP - shares MCD - 30 shares JNJ - 25 shares GIS - 25 shares PAYX - option shares Open Market Purchase Price: Leaps Join Education Covered Calls Selling Puts Dividends Value Investing with Options! All About LEAPS LEAPS, or Long Term Equity AnticiPation Securitiesare really option different than regular options with the exception of having a much longer expiration horizon.
Learn How I Turned $16k into $131k Trading Options on NFLX
Learn How I Turned $16k into $131k Trading Options on NFLX
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Another Answer: Homework on the weekend or on a holiday is annoying, but it does not harm you.