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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.

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.

What is a leap strategy?

LEAPS (Long-term Equity Anticipation Securities) are option contracts with an extended expiration date beyond one year. You can use them to generate income with three strategies: LEAP strategies are similar to many short-term options strategies.

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