options question

Discussion in 'Options' started by optionquest, Feb 10, 2008.

  1. I am not new in stock picking but im a novice in trading options. I have traded long call/ and puts and have made money last year. i havent traded leaps . Im looking on buying call leaps. but then im debating if ill just buy long calls instead. xyz is trading @ 15.28 at this time. Im expecting this stock to be double by july 08

    here are the info:

    call sept 08 17.50 // leaps jan call 09 17.50
    IV 49.50// 50
    delta45//50
    theta-.0057//-.0047
    bid: 1.30//2.6
    ask: 1.95//1.85

    1) im leaning more in trading sept long call . am i wrong?.. what is the beauty of trading leaps. does it get more return than long call as it gets to expiration date as long as you close leaps before 90 days.
    2.) if you buy a long call (or put) and gets too Deep in the money does it get called or turn to stock. or does it only happen in spreads.

    if this question sounds novice to you because I am. Ive lost money in trying different techniqeus so now im back to papertrading until i get more practice. I read, study and work hard in learning strategies but i have to say that I am learning from all of your trading techniques and experiences.

    Thanks for your help.

    Ps.
    who are the superbowl winners here?
     
  2. MTE

    MTE

    If you buy an option then no one but you can exercise it (well, the exception is the automatic exercise of ITM options at expiry). No matter how deep ITM it gets, it will still be an option until either you exercise it or it is automatically exercised at expiry.

    There's no particular beauty in trading Leaps. Leaps just give you more time, but since your time target is Jul, Sep options are more than enough, in my view.
     
  3. I agree with MTE in that there's no particular beauty in trading Leaps. They just give you more time. Sep options are more than enough.

    If your stock doubles by July, either call will provide a similar gain. My 2 cents would be that the LEAP is riskier to the downside since it has more to lose should the stock get whacked.