from the desk of Dr. Terry F Allen

Skip navigation

Member Login  |  Contact Us  |  Sign Up

1-800-803-4595

Option LEAPS

LEAPS have nothing to do with how high a basketball player can jump, or anything a frog does, or even those crazy years that come along every four years when February has 29 days.

Option LEAPS are simply options that have a long life span, usually a year or more.  There is no precise time period for when an option is called a LEAP, but the one-year lifespan is generally accepted to be about when it starts.

An option might start out being a LEAP, but over time as there are fewer months remaining until it expires, it is no longer called a LEAP.

LEAPS is an acronym for Long-term Equity AnticiPationS. Most LEAPS expire in January, but in the past few years, additional long-term months have been offered for many underlying stocks.

One of the most popular use of LEAPS is as the long side in a calendar spread.  A person buys a LEAP which goes down very slowly in value and simultaneously sells someone else a short-term option at the same strike price which goes down much faster in value.  For a free report on how calendar spreads work, go to How to Make 70% a Year With Calendar Spreads.

Terry's Tips Stock Options Trading Blog

July 30, 2015

Long-Term Options Strategies For Companies You Like

Today I would like to share an article I sent to paying subscribers two months ago. It describes an 8-month options play on Facebook (FB), a company that seems to be doing quite well these days. The spread is a vertical credit put spread which I like because once you place it, you don’t have to make any closing trades (both options hopefully expire worthless, all automatically) as long as the stock is any higher than a pre-determined price. It is actually quite simple to do, so please don’t tune out because its name sounds so confusing.

Terry

Here is the exact article sent out on April 24, 2015:

“A Long-Term Play on Facebook (FB): Last week in my charitable trust account I made a long-term bet that FB would not fall dramatically from here during the balance of 2015. It seems to be a good company that is figuring out how . . .

June 27, 2015

5 Option Strategies if you Think the Market is Headed Lower

A subscriber wrote in and asked what he should do if he thought the market would be 6% lower by the end of September. I thought about his question a little bit, and decided to share my thoughts with you, just in case you have similar feelings at some time along the way.

Terry

5 Option Strategies if you Think the Market is Headed Lower

We will use the S&P 500 tracking stock, SPY, as a proxy for the market. As I write this, SPY is trading just below $210. If it were to fall by 6% by the end of September (3 months from now), it would be trading about $197 at that time. The prices for the possible investments listed below are slightly more costly than the mid-point between the bid and ask prices for the options or the option spreads, and include . . .

June 1, 2015

Why Option Prices are Often Different

This week I would like to discuss why stock option prices are low in some weeks and high in others, and how option spread prices also differ over time. If you ever decide to become an active option investor, you should understand those kinds of important details.

Terry

Why Option Prices are Often Different

The wild card in option prices is implied volatility (IV). When IV is high, option prices are higher than they are when IV is lower. IV is determined by the market’s assessment of how volatile the market will be at certain times. A few generalizations can be made:

Making 36%

Making 36% – A Duffer's Guide to Breaking Par in the Market Every Year in Good Years and Bad

This book may not improve your golf game, but it might change your financial situation so that you will have more time for the greens and fairways (and sometimes the woods).

Learn why Dr. Allen believes that the 10K Strategy is less risky than owning stocks or mutual funds, and why it is especially appropriate for your IRA.

Order Now

Sign Up Your 2 Free Reports & Our Newsletter Now!

Sign up for Dr. Terry F Allen’s free newsletter and get immediate access to his most current report on his stock option trading strategies.

TD Ameritrade

Member Login  |  Programs and Pricing  |  Testimonials  |  About Us  |  Legal Notices  |  Accessibility Statement  |  Privacy Policy  |  Site Map

thinkorswim, Division of TD AMERITRADE, Inc. and Terry’s Tips are separate, unaffiliated companies and are not responsible for each other's services and products.

©Copyright 2001–2015 Terry's Tips, Inc. dba Terry's Tips

Close Window

Sign up for the Terry’s Tips Free Newsletter and Receive 2 Options Strategy Reports:

or

Login to Your Existing Account Now

No Thanks

Newsletter Signup

Member Login

Enter your primary email below, and we'll send you a new password