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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Mark Lawrence who wrote (60980)	7/22/1998 3:07:00 PM
From: Paul Engel	Read Replies (2) \| Respond to of 186894

Mark - Re: "Can someone explain to me what a leap is?" LEAPS are, for all practical purposes, OPTIONS - but of a longer term nature. I believe LEAP is an acronym for Long Term Equity Appreciation or something like that. LEAPS are available as both CALLS and PUTS, and both Leap Calls and Leap puts can be bought or sold. Basically, buying a LEAP CALL is a "bet" on the stock going up. Buying a LEAP PUT is a bet on the stock going down, Selling LEAP CALLS is a bet on the stock going down and similarly, SELLING LEAP PUTS is a bet on the stock going up! Standard OPTIONS are available for stock with expiration dates that extend out about 3 or 4 months. LEAPS, on the other hand, extend out further in time - the EXPIRATION DATE - by about 2 1/2 years for new LEAPS. Buy standardization, ALL LEAPS expire in the month of January at the normal 3'rd Friday of January. As an example, Intel has LEAPS available now for expiration in January, 2001. These just became avaiable within the past month or two. There is a PREMIUIM associated with these, implying that the price of the LEAP CALL is higher than just the difference between the STOCK price and the STRIKE/Exercise price. LEAPS and OPTIONS are more of a gamble than the stock because they have an EXPIRATION date associated with them. At the expiration date, they need to be sold or exercised and if the stock has "gone the wrong way" - "bad news, you lose". If you bought and held the actual stock, you could just continue to HOLD and wait for the stock to go up. Re: "Supposedly there was a big play on the Intel 2000 leaps at 70. " If there were a lot of CALL LEAPS purchased for a $70 strike price, that would be BULLISH - in the BUYERS' mind. Of course, somebody would have to SELL those CALLS - which would be BEARISH in the SELLER's Mind. Of course, OPTIONS market managers will do some convoluted things when there is an order imbalance such as shorting the stock to protect their investments. Paul