Trading LEAPS?

Discussion in 'Options' started by lindq, Jun 16, 2003.

  1. lindq

    lindq

    Curious if anyone is trading LEAPs as a short term vehicle. I swing trade and look for 4-5% profit in a few days. In my few experiences using LEAPS as a stock substitute, I have profited nicely.

    In my admittedly short LEAPS career, I've noticed what seem to be a few advantages.

    1. Much tighter spreads than short term options. This would be an advantage if the stock does NOT perform, and the position needs to be closed.

    2. Less degradation in the time value of the option, which can be a big advantage when holding for even a few days.

    3. As compared to a future, downside is limited to the premium. A nice advantage if the stock takes a major hit.

    Although a move in the underlying will be greater with a short term option, there can still be a very nice kick with the leap, plus the advantages listed above.

    Anyone have any experiences they want to share?
     
  2. Do LEAP transactions receive 60/40 tax treatment?
     
  3. no
     
  4. thanks