>>the time premium is a function of the square root of time. This gives an incredible advantage to LEAPS, codawg.
How does this give an incredible advantage to leaps?
>>And don't discount the tax advantages of LEAPS, as, unlike their shorter lived cousins, they are eligable for long term capital gains.
Leaps only have a tax advantage if they are used as an investment vehicle, not as a trading vehicle. Any investment can have a similar tax advantage (including options if excercised). But a lot of us like to trade too, and cap gains taxes are a fact of life whether I use options, leaps, stocks, 30 year bonds, airplanes, or wine as my trading vehicle. I don't see an inherent advantage to leaps here.
Over the past 7 weeks, there is almost no doubt that a short term QCOM options strategy has outperformed a one or two year leap strategy (assuming both were bullish). Of course, there's a greater risk that you have to take for this greater reward. You can call the leaps Spud Webb if you want, but that makes the QCOM Jan `00 options Michael Jordan. |
