LEAPS as financing tool.

Discussion in 'Options' started by Traveler, Feb 8, 2013.

  1. Go easy on me, this is a rookie question. I'm wanting to use LEAPS to get levered exposure to a stock in an account that can't have margin.

    Asset A trades at 35% implied vol. Do I buy options of sufficient delta to get my target exposure, or do I lever asset B which has no dividend and trades at 13% implied vol and then purchase Asset A in the underlying with the cash freed up. It would seem to me that the second option would be cheaper overall.
  2. sonoma


    Can you give us the exact trade you're considering? I can construct several scenarios with the trades you propose.
  3. Holding BRK. Want 100 deltas of AAPL and don't want to reduce my exposure to BRK.
  4. don't you Have to have a Margin account, to buy or sell Options?

  5. No. Not for long options.
  6. Answered my own question. Options to express 100 deltas of BRK B are much cheaper than the equivalent dollar amount of AAPL due to the difference in vol.