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Understanding LEAPS: Using the Most Effective Options Strategies for Maximum Advantage by Marc Allaire

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CHAPTER 3LEAPS: How They Differ from Other Options

The short answer to the question “How do LEAPS differ from other options?” is to say that they are longer-dated and leave it at that. The reality is that there are some other points of difference that investors and traders looking to add LEAPS to their arsenal should be familiar with. This chapter focuses on equity LEAPS; for the differences relating to index options, see Chapters 14 and 18.

UNDERLYING STOCK

Not all optionable stocks also have LEAPS listed for trading. As of mid-2002 there were equity options listed on 2800 stocks and LEAPS listed on 430 of those. The stocks on which LEAPS are listed fall into two broad categories: the “big names,” such as IBM, GM, or GE, and smaller stocks in ...

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