All About LEAPS Investing for Financial Freedom
LEAPS investing involves contracts that are at least one year long from the date of purchase. LEAPS stands for Long-Term Equity Anticipation Securities.
Some investing professionals look at LEAPS investing as an alternative to trading stocks because there is less risk with these investments as they are not owned in a portfolio.
LEAPS stocks were introduced in 1990 by the Chicago Board Options Exchange (CBOE) so they are newer than many other investment options. With LEAPS, the holder has the ability to buy a call or sell a put up to the specified expiration date for a predetermined price. With LEAPS you are not buying and owning the stock because they are not assets.
These long-dated put and call options require a minimum contract of at least one year, but they can be as long as three years. This long nature of LEAPS makes them different from other security options, which typically have much shorter expiration periods. Contracts associated with LEAPS always expire in January of the expiration year.
LEAPS investing is good for aggressive investors or those who are investing with money they are not concerned with losing. LEAPS can be helpful for investors who want diversification and exposure to a specific sector without the need of investing significant capital.
As with other shorter-term options, it is possible to lose one’s entire investment in LEAPS. So it is important to invest carefully and to do so in these long-term options when you feel confident in it.
To learn more about LEAPS investing, read our articles covering every angle of this topic below. You should also download our Options Trading Basics special report for FREE to help you reach your goals. If you enjoy what you learn and would like to join our community of like-minded people like yourself who are planning their financial freedom, I recommend joining the Financial Freedom Federation Gold Club.