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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: imdchamps who wrote (34292)	11/3/2000 1:52:20 PM
From: Uncle Frank	Read Replies (1) of 54805

I have used LEAPS substitution therapy on several occasions, with mixed results. The problem arises when the underlying crashes, a la Q. In an ugly situation such as that, the LEAPS lose a much higher percentage of their value than the stock - negative leverage. And even if the stock rises, LEAPS are not long term instruments so you will need to sell or exercise them in 12 - 18 months. Bottom line, if you can handle the volatility of LEAPS, they represent the best method I know of to increase leverage while avoiding the perils of margin. uf

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