LEAPS Options Trading Strategy
LEAPS or Long-term Equity AnticiPation Securities are option contract for an extended period of time. They are introduced in early 1990s and are quite popular among active option traders. LEAPS are similar to traditional options contracts except the long-term nature. Because of this extended expiration date, trading LEAPS are considered as “Investing” not “trading”.
Long-term Equity Anticipation securities are available for both equities and market indexes. The usual expiration date is one or two years; the expiration date of an equity LEAPS is Saturday after the 3rd Friday of a month where that for index LEAPS is the January 1st of the expiration year. The option premium for LEAPS options is usually higher than that of short-term options. LEAPS option trades can also can roll LEAPS to more periods by selling older LEAPS and buying new LEAPS without any additional costs.
LEAPS options trading strategy provide the investors an opportunity to make more profit than trading short-term options. This options strategy is beneficial for traders want to profit from large growing companies, to hedge large decline in underlying stock price or market fall, to take bearish or bullish position in a market, etc. LEAPS options are not available for all company stocks and the number of index LEAPS offered by CBOE (Chicago Board Options Exchange) is 13.
Long-term Equity Anticipation securities are available for both equities and market indexes. The usual expiration date is one or two years; the expiration date of an equity LEAPS is Saturday after the 3rd Friday of a month where that for index LEAPS is the January 1st of the expiration year. The option premium for LEAPS options is usually higher than that of short-term options. LEAPS option trades can also can roll LEAPS to more periods by selling older LEAPS and buying new LEAPS without any additional costs.
LEAPS options trading strategy provide the investors an opportunity to make more profit than trading short-term options. This options strategy is beneficial for traders want to profit from large growing companies, to hedge large decline in underlying stock price or market fall, to take bearish or bullish position in a market, etc. LEAPS options are not available for all company stocks and the number of index LEAPS offered by CBOE (Chicago Board Options Exchange) is 13.
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posted by Daniel Pipitone at
11:35 PM
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