Using LEAPS As An Alternative to Buying ETFs

Long-term equity anticipation securities (LEAPS) are long-term stock options with expiration dates set at least 12 months into the future. Long-term investors that normally shy away from traditional stock options can use LEAPS to gain long-term exposure to ETFs without actually spending the money to buy shares in them [see ETF Call And Put Options Explained]. What Are LEAPS? First introduced by the Chicago Board Options Exchange (“CBOE”) in 1990, LEAPS are publicly traded stock option contracts with expiration dates ranging from one to three years into the future. These options function are just like traditional shorter-term stock options, but their extended expiration dates make them ideally suited for long-term investors [Download 101 ETF Lessons Every Financial Advisor Should Learn]. LEAPS are characterized by higher premiums than short-term stock options, since there’s more time for price movement to occur in the underlying stock. They also experience time decay just like normal [...] Click here to read the original article on ETFdb.com. Related Posts: ETF Bull Put Spread Options Strategy Explained Daily ETF Roundup: XLF Rallies, VNQ Sinks Alongside REITs Daily ETF Roundup: SDY Slumps Alongside High-Yield Sectors, GDX Rips Higher Discretionary ETF (XLY) Resumes Uptrend After Upbeat Confidence Data Daily ETF Roundup: KBE Pops As Banks Charge Ahead, UST Slumps