Why Invest in Stocks? Buy LEAPS Options - It's Much Cheaper

Define options as the right, not the obligation, to buy or sell at a pre-agreed price with a premium, while markets include over-the-counter and exchange-traded options.

Explore call options and put options, where holders buy or sell 100 shares at a fixed strike price before expiration, with writers selling these options and bullish or bearish strategies.

Explore the seven provisions of an option, including buying or selling as holder or writer, selecting an underlying asset, strike price, premium, exercise, and option style (American or European).

Compare american and european option styles and early exercise, and explain how the option premium represents the price for rights to buy or sell the underlying stock at predefined strike.

Define volatility as the degree of price movement and explain its effect on option premiums, distinguishing historical from implied volatility using a Facebook price move example.

Explore the option Greeks—delta, vega, gamma, and theta—and how they describe sensitivity of option prices to the stock price relative to the strike price, time to expiration, and volatility.

Explore the delta, the most important Greek, how a $1 stock price move changes the option value by about 0.50, and the 0–100% delta range used in delta hedging.

Explore option trading strategies like straddles, strangles, and spreads by buying and selling calls and puts across different expirations and strike prices. Hedging features reduce risk and guide profit potential.

Learn the basics of options and essential terms for selling covered calls, including put options, call options, underlying shares, expiration, bid/ask, and in-the-money and out-of-the-money concepts with real data.

Explore how to access options data on Yahoo Finance, view calls and puts by expiration, compare related metrics, and explore straddle views for informed stock investment decisions.

Explore the structure of the option chain, including calls, puts, strike price, last change, volume, and open interest, using a live example with Facebook options and expirations.

Understand how strike price and call options work with a 120 strike expiring August 19, 2008; exercise to buy 100 Facebook shares at 120 when price rises, leveraging gains.

Analyze put options, volume, and open interest at a 120 strike, compare puts and calls, and see how exercising a put can profit from price moves.

Identify that the 120 strike call on Facebook is in the money, as the share price stands at 121.92, enabling immediate profit when exercised.

Identify in the money put options: a put is in the money when the strike exceeds the current price, enabling immediate profit on exercise, as 122 to 124 puts.

Understand out of the money call and put options, where strike prices exceed or fall below the current Facebook share price, yielding no immediate profit from exercise.

Explore how expiration dates shape option pricing by comparing near-the-money calls and puts across weekly and monthly expirations, showing longer time to expiration raises prices while approaching expiration lowers them.

Explore how LEAPS long-term options offer a cheaper alternative to stocks, enabling bullish, insurance, or stock replacement strategies, including time spreads and covered calls.

Leaps are long term options with lower time decay and greater protection than short term options, while delta and expiration drive leverage and exposure to long-term trends.

Leaps provide long-term options on 100-share contracts, enabling calls or puts, hedging, and higher leverage, while diversifying your stock portfolio and potentially lowering total dollar risk while preserving upside.

Explore how long-term options, or leaps, let you control stocks like Facebook, Altria, and IBM at a fraction of the price, with strong open interest and liquidity.

Learn to use nasdaq.com options trading center to identify the most active leaps for Facebook and read open interest, volume, and the puts-versus-calls balance for sentiment.

Learn how deep in the money LEAPS calls act as a cheaper stock substitute and how selling covered calls on those LEAPS—part of a double-edge strategy—enhances profits while limiting risk.

Explore selecting LEAPS options as stock substitutes using deep in-the-money calls with high delta in Facebook's 90 strike LEAP. Compare the option price and strike to owning the stock.

Compare leaps calls to stock, weighing price versus penalty using the 0.7x and 0.6x strike rule to choose between 90 and 75 Facebook calls.

Identify the most cost-effective leaps options for Altria by applying the 70/60 rule, selecting the 45 strike, and showing how this replicates stock exposure with far lower cost.

Sell short-term covered calls against LEAPS to reduce the cost of a LEAPS position. Preserve upside potential and manage risk with disciplined execution when the stock moves.

Explore what covered calls selling is, its mechanism and essence, why you may leave money on the table, and how to apply it to your stock portfolio.

Learn what happens after selling out-of-the-money leaps options and how a $2-per-option price across 50 options yields a $10,000 gain, plus the associated risks of covered calls.

Discover the core idea of covered calls selling and the essential assumptions, including owning shares and tradable options, to understand why this strategy can generate income while managing risk.

Learn how a unified margin account enabling stock and option trades supports covered calls selling, ensures 100 percent collateral, avoids naked options, and helps choose brokers that handle both assets.

Explore the mechanics and rationale of covered calls selling by pairing call options with shares, avoiding margin, and receiving option proceeds directly to your bank account after fees.

Discover the advantages of selling covered calls, including immediate premium cash and a cushion against losses, with repeatable cycles that boost yield on your stock holdings.

Assess the alleged disadvantages of selling covered calls; the caption claims none, with the sole downside being lower profits if the stock jumps, and suggests puts as a cheaper alternative.

Examines selling out-of-the-money options as covered calls, showing a $2 option price per option with 50 options yielding $10,000, and flags the risks to be discussed later.

Choose shares to use as collateral for selling covered calls, ensuring you hold at least 100 shares per option. Calculate the options to sell by dividing total shares by 100.

Enter a stock symbol in Yahoo Finance, open the options menu, and view the stock’s option chain with a straddle view to compare calls and puts side by side.

Choose the expiration date as the closest date above 45 days from now to balance time decay and simplicity. The example uses Facebook stock with a September 16 expiration.

Select a strike price at least 3 percent above the current share price by multiplying by 1.03, ensuring the option stays out of the money, for selling covered calls.

Sell covered call options at the chosen strike price and expiration to generate income, using a market order for liquid stocks and estimating proceeds with current option prices.

Explore the four potential scenarios until expiration and how to manage a sold option with a simple approach, including buybacks or selling other options.

Analyze the worst-case decline to 118 at expiration and how selling the September call options with a $3.40 premium remains profitable, breaking even near 117.60.

Explain how a sideways-traded stock leaves call options out of the money, so you keep your shares and collect option-premium yields.

Watch how a modest stock rise keeps sold call options out of the money, letting you keep premiums and shares while profiting from the price increase.

Capture profits from a stock price jump above the sold call strike and the option premium when using covered calls, delivering about a 5.8% yield in under two months.

Sell covered calls on 80 Facebook shares valued at $106,480 and earn about 2.55% over roughly two months, annualizing to about 15%.

Learn why and when to buy back sold call options before expiration to protect long stock positions, lock in profits, and avoid being exercised, with date-by-date examples.