Jacob,
1. "when do LEAPs with expiration in January 2001 become available?"
The '98 LEAPs (renamed ANQ) are to expire this coming Jan, so the '01s are coming soon; I just don't know when, I think a new issue LEAP has at least 2 1/2 year life to begin with...maybe somebody could help us in this...
2. "What is the tax status of LEAPs? If I bought a LEAP, and held it for 18 months, and sold it, does the gain count as a long-term cap. gain? Or do I have to exercise the option, and hold the actual stock for 18 months? If the latter is true, this makes LEAPs much less appealing to me."
Unless they changed the rules in the new tax code, the LEAPs are treated like stocks---the gains/losses are treated short/long term depending upon the holding period.
3. "Know any good books on LEAPs?"
I don't know; mine is self-taught.
4. "Is there any advantage to choosing the LEAP that is the most liquid (i.e., the option with the most # of contracts sold)?"
Not necessarily; the most traded now may not be popular when the stock is way down or way up, the popular ones are those with exercise prices near where the stock is presently traded.
"What do you think of this as the lowest-risk strategy for LEAPs (yes, I know, using the phrase low-risk and LEAP in the same sentence is absurd):"
1. "Wait for a double bottom in the stock price, and then wait a bit longer, to make sure it really is a bottom. Make sure you don't buy as it's still going down, even if this means buying well after the bottom."
2. "Start buying calls, in small increments."
3. "Buy the longest-term LEAP available."
4. "Buy in-the-money, or slightly out-of-the-money. This makes the LEAP a close proxy of the stock itself, with less equity required."
5. "Have no more than 10% of your portfolio in LEAPs."
6. "When the stock has doubled from its low, begin selling, in small increments. Begin by selling the options that expire first."
7. "If the stock doesn't double, then roll the LEAPs over, to the next (longest-term) LEAP available. Roll them over within 6 months of when they become available."
8. "Never let a LEAP get to within 6 months of expiration. Sell, even if it means a loss."
9. "Once the underlying has doubled from its low, then sell all LEAPs on any 30% correction, as 30% corrections usually foretell a 50% correction lasting many months."
10. "Sell all LEAPs if any of the following occurs: no bears left on the SI thread, insider selling, PE above 45(using trailing earnings), fab pushouts, memory chip prices falling at a rate greater than 30%/year, semi-equip BTB falls for 3 months in a row."
1 to 10 are strategies that are Good to Excellent...I can not think of any reason you are going to lose as long as you follow them and of course, as long as the stock goes Up in the future---so as to enable you to sell at a profit!... |
