What Are LEAPS Options?

What are LEAPS Options?

Bywww.Options-Trading-Education.com

http://www.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.



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.


http://www.options-trading-education.com/6584/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.


http://www.options-trading-education.com/6558/use-puts-to-preserve-stock-gains/

http://www.options-trading-education.com/6558/use-puts-to-preserve-stock-gains/


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

optionswww.Options-Trading-Education.com


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 others with deep pockets because of

the risk of an occasional substantial

loss.



Trading Stock Indexes with LEAPS



Many traders and investors choose to

trade LEAPS options on index traded funds.



This approach has to do with investing in or

betting against the overall economy and

market.



As will nearly all options trading one

does not need to hold the LEAPS contract to

expiration.



Traders will exit their position by executing the opposite trade in

order to secure profits or reduces losses.



So, what are LEAPS options



They are a longer than usual options contract that provides a longer time span for making profits in both stocks

and stock indexes.



The options trading strategies

that one uses will depend on the stock or index in questionwww.Options-Trading-Education.com

http://www.options-trading-education.com/6599/options-trading-strategies-2/

http://www.options-trading-education.com/6599/options-trading-strategies-2/


and a combination of fundamental and technical factors.



For more insights and useful information about

options and options trading, visit


.www.Options-Trading-Education.com




What Are LEAPS Options?

News & Politics

What Are LEAPS Options?