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What are leap call options & how do they work?

LEAP call options are basically long-term call option contracts with expirations beyond one year. These give the buyer the right, but not the obligation, to purchase the underlying stock at a specified strike price until the expiration date.

What are equity leaps call options?

Equity LEAPS call options allow investors to benefit from potential rises in a specific stock while using less capital than purchasing shares with cash upfront. In other words, the cost of the premium for an option is lower than the cash needed to buy 100 shares outright.

Should you buy a leap call option instead of a stock?

Investors can purchase a LEAP call option contracts instead of shares of stock in order to get similar long-term investment benefits with less capital outlay. Substituting a financial derivative for a stock is known as a Stock Replacement strategy and is used to improve overall capital efficiency.

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