Twice the time for about one and a half times the price. This lesson shows how time sets the price of options with more than a year left, how a LEAPS call can stand in for shares, and where the risks are.
After this lesson you can
- Explain why a longer option costs less per month of time
- Describe what interest and dividends do to LEAPS prices
- Compare a LEAPS call with owning the shares
- Name the risks that matter most for long-dated options
- Insure shares with a LEAPS put or sell calls against a LEAPS call, and avoid the five mistakes
Chapters
- 0:00Two years for one and a half times the price
- 1:14What LEAPS are
- 2:11How time sets the price
- 3:33Interest and dividends
- 4:38A stand-in for the shares
- 5:55One year later
- 7:18Insuring shares for two years
- 8:25Selling calls against a LEAPS call
- 9:38The risks
- 10:45Five mistakes
- 11:41The whole lesson on one screen
Practice in the game: Level 19 · The Long Ticket