What are LEAPS Options? By www.Options-Trading-Education.c om
What Are LEAPS Options?
Sep 14, 2014
http://www.options-trading-education.com/6610/what-are-leaps-options/
What Are LEAPS Options?
An options trader may wish to trade with a longer timeline than with regular options contracts. In this case he or she may choose LEAPS options. What are LEAPS options? LEAPS is an acronym. A Long Term Equity AnticiPation Security is an option with longer term until expiration than other options. There are LEAPS available for well over two thousand equities as well as nearly two dozen indexes. What are LEAPS options for traders? LEAPS are way to buy or sell puts or calls on contracts that commonly run for up to three years. This is as opposed to the three, six, and nine month terms for commonly traded options. What are LEAPS options for investors? They are a means of hedging risk through online options trading. As an example, an investor may purchase shares of a rapidly rising stock and also buys puts on the stock. This way he guards against an unexpected correction of the stock. If the stock falls in price he executes the put option and sells his stock at the contract or strike price, even though the market price may have fallen significantly.
Buying LEAPS Options
The Chicago Board Options Exchange, part of the CME group, offers a wide range of LEAPS options contracts. What are LEAPS options via CBOE for investors? Buying LEAPS calls with three year expirations is similar to buying stocks. The long term of a LEAPS contract, allows for the trader to profit from steady growth and prosperity of a company, and not have to try anticipating a short term move in the stock price. As mentioned above investors also use puts to preserve stock gains using LEAPS contracts. This provides insurance against a fall in price of the stock. It should be noted that traders pay for the increased time value of a LEAPS options contract. They cost more than regular options contracts.
Selling LEAPS Options
What are LEAPS options for options writers? As with all options trading, sells typically outperform options buyers over the long term. Options writers of LEAPS demand a higher price for selling puts and calls on LEAPS because of the time until expiration. Three years is a long time in the world of options and this can spell good profits for options writers and it can spell the occasional disaster. As will all options, the bulk of options writing is done by large trading houses and other with deep pockets because of the risk of an occasional substantial loss.
What Are LEAPS Options?
An options trader may wish to trade with a longer timeline than with regular options contracts. In this case he or she may choose LEAPS options. What are LEAPS options? LEAPS is an acronym. A Long Term Equity AnticiPation Security is an option with longer term until expiration than other options. There are LEAPS available for well over two thousand equities as well as nearly two dozen indexes. What are LEAPS options for traders? LEAPS are way to buy or sell puts or calls on contracts that commonly run for up to three years. This is as opposed to the three, six, and nine month terms for commonly traded options. What are LEAPS options for investors? They are a means of hedging risk through online options trading. As an example, an investor may purchase shares of a rapidly rising stock and also buys puts on the stock. This way he guards against an unexpected correction of the stock. If the stock falls in price he executes the put option and sells his stock at the contract or strike price, even though the market price may have fallen significantly.
Buying LEAPS Options
The Chicago Board Options Exchange, part of the CME group, offers a wide range of LEAPS options contracts. What are LEAPS options via CBOE for investors? Buying LEAPS calls with three year expirations is similar to buying stocks. The long term of a LEAPS contract, allows for the trader to profit from steady growth and prosperity of a company, and not have to try anticipating a short term move in the stock price. As mentioned above investors also use puts to preserve stock gains using LEAPS contracts. This provides insurance against a fall in price of the stock. It should be noted that traders pay for the increased time value of a LEAPS options contract. They cost more than regular options contracts.
Selling LEAPS Options
What are LEAPS options for options writers? As with all options trading, sells typically outperform options buyers over the long term. Options writers of LEAPS demand a higher price for selling puts and calls on LEAPS because of the time until expiration. Three years is a long time in the world of options and this can spell good profits for options writers and it can spell the occasional disaster. As will all options, the bulk of options writing is done by large trading houses and other with deep pockets because of the risk of an occasional substantial loss.
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Transcript
What are LEAPS Options?
Bywww.Options-Trading-Education.com
An options trader may wish to trade with a longer timeline than with regular options
contracts.
www.Options-Trading-Education.com
In this case he or she may choose LEAPS
options. What are LEAPS options?
LEAPS is an acronym.
www.Options-Trading-Education.com
A Long Term Equity AnticiPation Security
is an option with longer term until
expiration than other options.
www.Options-Trading-Education.com
There are LEAPS available for well over two thousand equities
as well as nearly two dozen indexes.
www.Options-Trading-Education.com
What are LEAPS Options for Traders?
www.Options-Trading-Education.com
LEAPS are way to buy or sell puts or calls on
contracts that commonly run for up
to three years.
www.Options-Trading-Education.com
This is as opposed to the three, six, and nine month
terms for commonly traded options. What are
LEAPS options for investors?
www.Options-Trading-Education.com
They are a means of hedging risk through
online options trading.
www.Options-Trading-Education.com
As an example, an investor may purchase
shares of a rapidly rising stock and also
buys puts on the stock.
www.Options-Trading-Education.com
This way he guards against an unexpected
correction of the stock.
www.Options-Trading-Education.com
If the stock falls in price he executes the
put option and sells his stock at the
contract or strike price,
www.Options-Trading-Education.com
even though the market price may have
fallen significantly.
www.Options-Trading-Education.com
The Chicago Board Options Exchange,
part of the CME group, offers a wide range of
LEAPS options contracts.
www.Options-Trading-Education.com
What are LEAPS options via CBOE for
investors?
www.Options-Trading-Education.com
Buying LEAPS calls with three year
expirations is similar to buying stocks.
www.Options-Trading-Education.com
The long term of a LEAPS contract,
allows for the trader to profit from steady
growth and prosperity of a company,
www.Options-Trading-Education.com
and not have to try anticipating a short
term move in the stock price.
www.Options-Trading-Education.com
As mentioned above investors also
use puts to preserve stock gains
using LEAPS contracts.
www.Options-Trading-Education.com
This provides insurance against a
fall in price of the stock.
www.Options-Trading-Education.com
It should be noted that traders pay for the
increased time value of a LEAPS options
contract.
www.Options-Trading-Education.com
They cost more than regular options
contracts.
www.Options-Trading-Education.com
What are LEAPS options for options
writers?
www.Options-Trading-Education.com
As with all options trading, sells typically
outperform options buyers over the long
term.
www.Options-Trading-Education.com
Options writers of LEAPS demand a
higher price for selling puts and calls on
LEAPS because of the time until expiration.
www.Options-Trading-Education.com
Three years is a long time in the world of
optionswww.Options-Trading-Education.com
and this can spell good profits for
options writers and it can spell the
occasional disaster.
www.Options-Trading-Education.com
As will all options, the bulk of options writing
is done by large trading houses
www.Options-Trading-Education.com
and others with deep pockets because of
the risk of an occasional substantial
loss.
www.Options-Trading-Education.com
Trading Stock Indexes with LEAPS
www.Options-Trading-Education.com
Many traders and investors choose to
trade LEAPS options on index traded funds.
www.Options-Trading-Education.com
This approach has to do with investing in or
betting against the overall economy and
market.
www.Options-Trading-Education.com
As will nearly all options trading one
does not need to hold the LEAPS contract to
expiration.
www.Options-Trading-Education.com
Traders will exit their position by executing the opposite trade in
order to secure profits or reduces losses.
www.Options-Trading-Education.com
So, what are LEAPS options
www.Options-Trading-Education.com
They are a longer than usual options contract that provides a longer time span for making profits in both stocks
and stock indexes.
www.Options-Trading-Education.com
The options trading strategies
that one uses will depend on the stock or index in questionwww.Options-Trading-Education.com
and a combination of fundamental and technical factors.
www.Options-Trading-Education.com
For more insights and useful information about
options and options trading, visit
www.Options-Trading-Education.com
.www.Options-Trading-Education.com
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