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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: ed who wrote (13879)	1/6/1999 2:07:00 AM
From: Alan Buckley	Read Replies (1) \| Respond to of 74651

Were LEAPs available in 1992? I thought they were added in the last few years during "derivitave-mania".

To: ed who wrote (13879)	1/6/1999 7:43:00 AM
From: mauser96	Respond to of 74651

When the expiration date is far off, perhaps more than 10 to 12 months, LEAPS act like warrants. They magnify the stock action and call LEAPS would be a good buy only if the stock goes up. As the time to expiration shrinks they begin to act like options.I am no expert on options, but my understanding is that options will usually turn out to be better than direct stock investment only if the volatility turns out to be more than expected. These options put a premium on short term timing in the market, a difficult task for most people. The cost of regular options is very high due to the huge bid - ask spread, and the fact is that the vast majority of regular option players lose money. I'm sure we have some option experts on the thread and maybe some of them will comment on owning regular options vs. owning the underlying stock. LEAPS make a lot more sense but only if you sell them before their value starts a time decay.