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

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CHAPTER 5Buying LEAPS Calls as an Investment Strategy

Option traders who purchase call options may appear surprised, but yes, there are some investors who buy call options because they actually do want to own the underlying stock. This chapter will look at buying calls from an investment perspective, that is, for those whose intention is to own the underlying stock at some point in time. Two aspects of this strategy will be explored: buying LEAPS calls in order to acquire the underlying stock at a later date, and purchasing LEAPS calls as an alternative to buying a stock on margin.

PURCHASING LEAPS IN ORDER TO ACQUIRE STOCK

For some, risk means being in the market: You own a stock and it may go down, leaving you with a losing position. For others, ...

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