LEAPS Masterclass: Day 1 Summary / by DED

The term LEAPS is nothing more than an acronym for a long-term option contract (Long-term Equity Anticipation Security). 

The bottom line is that buying calls is like borrowing money to buy stock, but with protection. The price of the call includes your borrowing costs and and the cost of your “protection”—so you’re not getting anything for free, but you are leveraging your bet on the future performance of a particular stock. You are also limiting the amount you can lose on the bet to the price of the call.

While LEAPS don’t have an unlimited life, they can usually be purchased up to two and a half years before they expire. This often gives ample opportunity for the stock market to recognize the results from an extraordinary corporate change (like a spinoff or restructuring) or a turnaround in fundamentals (like an earnings gain or the resolution of an isolated or one-time problem). Additionally, two and a half years is often enough time for many just plain cheap stocks either to be discovered or to regain popularity. Since current tax law favors holding investments for more than one year, buying LEAPS is also a way to receive long-term capital gains treatment while receiving the leverage benefits of an option investment.

In most cases, your decision to invest in LEAPS will simply be a by-product of your ongoing research efforts. Before you even begin thinking about LEAPS, a special situation or an undervalued stock will catch your attention as an attractive investment in its own right. Only after an investment passes this first hurdle will you bother to check whether a chosen investment situation has LEAPS available for trading. At the very least, being able to compare the risk/reward of a stock with the opportunities available through an investment in the related LEAPS will provide you with another good investment choice.

Reading Material:

You Can Be A Stock Market Genius - Joel Greenblat

Understanding LEAPS - Allaire

What is included in this course:

1.  6 weeks, 3 days a week (Tue, Wed, Thurs), 2-hour sessions @8pm EST.

2.  24/7 access to me via phone or email regarding leaps.

3.  When the six weeks is over, I will be your leap buddy and see u through until u are comfortable on your own.  You are not trading in a box - I will be there until u succeed.

Please email me (matt@optionsplayers.com) with any questions or concerns.  



This is for education purposes only, past performance is never indicative of future results, this is not advice, nor am I or OP responsible for anything you do in your own account so don’t be dumb because it’s on you.  This is a social network for traders not Goldman Sachs.