LEAPS® – Options for the Long Term

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LEAPS are available on approximately equities and 20 indexes. Options were originally created with expiry cycles of 3, 6, and 9 months, with no option term lasting more than a year. Options of this form, stock broker commission on leap option trade such terms, still constitute the vast majority of options activity.

LEAPS were created relatively recently and typically extend for terms of 2 years out. For example, if today were Novemberone could buy a Microsoft January call option that would expire in, or When LEAPS were first introduced inthey were derivative instruments solely for stocks ; however, more recently, equivalent instruments for indices have become available. LEAPS are often used as a risk reduction tool by investors. The owner of the stock essentially creates the LEAP.

The result at the expiry of the LEAP can be determined from its exercise price. LEAPs are written for a wide variety of exercise prices. If the close is higher than the exercise price, the LEAP typically will automatically be exercised by the broker.

The buyer can then sell the stock. Most often the buyer of the LEAP is a speculator who hopes that the stock will rise enough in market price for him to make a profit when the LEAP expires. From Wikipedia, the free encyclopedia. Please add a reason or a talk parameter to this template to explain the issue with the article. Retrieved from " https: Finance stubs Options finance.

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Options futures and other derivatives solutions manual 9th edition

Options are a complex investment and are not suitable for every investor. There are several types of options strategies, each with unique risks. Before you begin trading, we recommend that you read the brochure Characteristics and Risks of Standardized Options.

We'll send you a copy if your option application is approved. To buy and sell options on underlying financial instruments that trade on major U. If you're already a Vanguard client, our brokerage associates are available to answer your questions at Monday through Friday from 8 a.

Complete and submit a Brokerage Option Application, one for each brokerage account that you intend to use for options trading.

If you don't already have a Vanguard Brokerage Account, you'll also need to open an account. In reviewing your application, we'll consider your account type and the information you provide about your finances, trading experience, and investment objective.

Write covered calls, purchase protective puts, and write covered puts. Margin approval is required to write covered puts. The Options Industry Council's OIC's website has a wealth of education about options, whether you're just beginning or an experienced options trader.

Some topics you may want to explore include:. You must complete a Margin Account Application to be considered for these trading levels. Options are a leveraged investment and aren't suitable for every investor. Options involve risk, including the possibility that you could lose more money than you invest. A copy of this booklet is available at theocc. The booklet contains information on options issued by OCC. It's intended for educational purposes. No statement in the booklet should be construed as a recommendation to buy or sell a security or to provide investment advice.

The OIC can provide you with balanced options education and tools to assist you with your options questions and trading. Your use of this site signifies that you accept our terms and conditions of use Open a new browser window. Skip to main content. Search the site or get a quote. Understanding options trading Options are a complex investment and are not suitable for every investor.

Keep these points in mind when trading options: Consider whether options fit with your investment goals, risk tolerance, and objectives. You could see significant gains—or lose your entire investment—in a relatively short time. You should consult a professional tax advisor to discuss how options strategies may impact your tax situation. Submit your application Complete and submit a Brokerage Option Application, one for each brokerage account that you intend to use for options trading.

Complete an option application. Open a brokerage account. Getting approval In reviewing your application, we'll consider your account type and the information you provide about your finances, trading experience, and investment objective. You'll receive notice of your approval or denial by mail. We have four levels of options approval: Purchase calls and puts. Trade equity and index spreads. Includes Levels 1 and 2.

Write uncovered naked puts. Includes Levels 1, 2, and 3. Learn more about options trading Take an online class, watch a webcast, or try a virtual trading system.

Some topics you may want to explore include: Open or transfer accounts Have stocks somewhere else? Learn how to transfer an account to Vanguard. If you're new to Vanguard: Call Monday through Friday 8 a. If you're already a Vanguard client: My Accounts Log on.