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Tag Archives: Calendar Spread
Option expirations and theta

Mechanics of LEAPS

LEAPS are long-term options that have expiration dates between nine months and two and a half years out. The term is an acronym for Long Term Equity AnticiPation Securities. Once the expiration date is less than nine months away, LEAPS convert to conventional options. Some covered call writers will buy LEAPS in lieu of stocks […]

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LEAPS and Covered Call Writing: A Review and a Hypothetical Example/ Contest Application

A covered call writing-like strategy involves buying deep in-the-money LEAPS options and then selling short-term slightly out-of-the-money call options. Leaps become a stock surrogate. The term Leaps stands for Long Term Equity AnticiPation Security. They have expiration dates up to 2 1/2 years out.   Defining spreads Technically, covered call writing with LEAPS is known […]

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Using LEAPS options as a stock surrogate

LEAPS And Covered Call Writing

Covered call writing entails buying a stock and then selling an option.  But what if I buy a call option instead of the stock and then sell a call option on that option? I’ll be spending less money than the outright purchase of the equity and still generate cash from the sale of the call […]

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