LEAPS: A quick newbie question

Discussion in 'Trading' started by rickf, Mar 11, 2007.

  1. rickf

    rickf

    Given:

    (1) I purchase an ITM LEAP Jan08 call on a stock with low volitility (ie, GE)

    and

    (2) The underlying stock price rises a modest amount, such as $0.50-$0.75.

    Are my research and paper-trading experiments thus far wrong to show that LEAPS with long times 'till expiration tend to increase in value more quickly with smaller moves in the price of the underlying? Did I miss something here? Or is it the low delta coupled with the long extrinsic value at work here?

    Thanks for any info -- and yes, I am a cautious newbie trying to do some diligent homework before delving into the world of options-trading.