<<Concerning the 506% return, that is a return of $83,500 on an investment of $16,500 by buying the leap,
compared with a 100% return on a roughly $50,000 investment by buying common. Which is preferable? Duh... Again, I ask, why buy common?>>
Your question, apparently a rhetorical one, assumes one fact that simply cannot be assumed: That QCOM will continue to go up quickly and at such a rate as to allow the LEAP to ultimately be profitable. You are right in asserting that LEAPS are better than common when stocks are behaving the way you hope. (I also own LEAPS, and I do believe QCOM will go up enough to give me a nice profit.)
<<Gee, stop me before I sell all my stocks and buy leaps. I gotta think some more about this whole thing...>>
I have made some great profits holding LEAPS. But I have also taken a loss on LEAPS where the underlying stock has gone up....just not enough. Had I owned the common, I would have had a small profit. Instead, I lost my entire investment when the LEAP expired worthless. Buy LEAPS if you want, just consider all the potential results before you "take the leap." (Sorry, couldn't resist)
Happy Holidays, all. |
