Comments for LEAPSInvestor.com

Comment on A Better Covered Call Alternative by Darren

Darren — Thu, 12 Feb 2009 20:12:02 +0000

I totally agree! The pure cash outlay for a covered call can be overwhelming. When you look at using the LEAPS instead of buying the stock, you get two things you don’t in a covered call–defined risk and a higher ROI. Nice work Jake!

Comment on Cypress Options Present Opportunity by Roger

Roger — Mon, 12 Jan 2009 00:44:53 +0000

Great covered call but the other alternative involving LEAPS could result in a loss if the 7.50 call is exercised by the buyer. Am I overlooking something?

Comment on Are Fertilizer Companies Set to Rebound? by J Kot

J Kot — Sat, 03 Jan 2009 17:55:12 +0000

I farm and guess what Farmers aren’t short of Cash, Hell were far from short cash but guess what we don’t believe all the BS that POT and Agri are spouting. Most no actually all probably only increase their use a small percentage last year. But with grain prices dropping a whopping 50% or more The world can starve before I get sucked in to over pay for a product that has no shortage.
Eat your Fertilizer you’ll starve without farmers to grow it.

Comment on A Better Covered Call Alternative by Fred Thompson

Fred Thompson — Fri, 02 Jan 2009 20:41:27 +0000

This is a great article. Covered Calls has it’s known disadvantages which the author points out very well. Using leaps is a much less time-intensive approach to covered call trading.

Comment on DryShips Sees Calmer Waters Ahead by Jake Taylor

Jake Taylor — Thu, 18 Dec 2008 22:13:47 +0000

The $6.20 is a premium paid for the right to buy one share at $10. So, investors in this case would be able to pay $620 for the right to buy 100 shares at $10 per share. The $620 is not recoverable since it’s a premium, so the breakeven point is therefore $16.20 per share plus commissions.

Keep in mind, however, that this is between now and January of 2011 - so you have to evaluate what you think the odds are of it rising that high. The benefit is that you can get essentially the same upside past $16.20 at roughly half the cost of buying 100 shares for $1,228 (today’s price).

You can buy LEAPS the same way you buy a normal option - so you need options ability on your account. Luckily, if you’re doing call options only, you only need a basic level of proficiency on your account.

Comment on DryShips Sees Calmer Waters Ahead by elisef

elisef — Thu, 18 Dec 2008 18:51:20 +0000

Wondered about LEAPS option of investing. I don’t understand how you can buy something at $6.20, and turn around and sell it for $10 the next day..
If it sounds too good to be true it probably is..
Anyone want to explain this to me… And if it is legit, how to do it?
Upside? downside?

Best E

Comment on DryShips Sees Calmer Waters Ahead by Roger Boswell

Roger Boswell — Thu, 18 Dec 2008 15:08:51 +0000

Good article, to the point. I do not like to read reports that drone on and on. You folks save me time, which is what I need more of, Thanks

Comment on Using LEAPS as a Stock Substitute by Jake Taylor

Jake Taylor — Sat, 13 Dec 2008 19:21:19 +0000

Hi Suri,

The $14.34 comes from the $133.30 effective purchase price, minus the $111 that you invested, minus the $7.96 in interest received. Essentially, this means that the only “extra” capital you’d have to commit to the position is the the $14.34, which is a good deal given that you’re at an immediate profit.

Thanks,
Jacob

Comment on Using LEAPS as a Stock Substitute by Suri Kade

Suri Kade — Sat, 13 Dec 2008 14:12:54 +0000

Hello, I am quite new to options and this was very helpful. Good explanation. I had a question in Situation#2 where you had mentioned the following:
“Should the investor decide to exercise the call, the effective purchase price would be $133.30 (the $33.30 paid for the call plus the $100 necessary to exercise the option). In the event of a call, there will be a cash deficiency of $14.34 – that is, the investor will have to come up with that amount to cover the option’s exercise price of $100 per share.”

I did not fully understand the cash deficiency of $14.34. I would appreciate if you can explain with some numbers.

Thanks,
Suri

Comment on Using LEAPS as a Stock Substitute by Rick Duslak

Rick Duslak — Wed, 10 Dec 2008 07:02:20 +0000

Thank you for writing this extremely informative article…I found it very educational with lots of practical information that I can use immediately…Thanks!