1 / 17

LEAPS

LEAPS. Long Term Equity Anticipation Securities. LEAPS. Basically a Long Term Option Minimum of 1 Year Out Maximum of 3 Years Out Excellent Investment Tool For Retirement Accounts Advantage of Leverage Ideal for Conservative Investors. Searches/Selection . Investools Big Chart

ura
Télécharger la présentation

LEAPS

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. LEAPS Long Term Equity Anticipation Securities

  2. LEAPS • Basically a Long Term Option • Minimum of 1 Year Out • Maximum of 3 Years Out • Excellent Investment Tool For Retirement Accounts • Advantage of Leverage • Ideal for Conservative Investors

  3. Searches/Selection • Investools Big Chart • Future Industries/Sectors That Will Remain Strong • Bullish Searches • Strong Stocks in Multiple Time Periods • Great Earnings, Sales and Cash Flow Growth • Growth Stock Strategy #1 • Growth Stock Strategy #2 • Global Search • Customize • IBD (Investors Business Daily) 100

  4. Strategies • Can Be Used on Traditional Stocks or on Equity Indices • Alternative to Outright Stock Purchase • Can Be Used on Stocks That Have Recently Split • Can Sell a Current Month Call on a Future Position (Like a Covered Call)

  5. Traditional Stock/Equity Index • Not All S/E Have LEAPS – CBOE • Are High Premium Because of Longer Period of Time Value • Break Even Point at Expiration Higher Than Usual • Examples: POT, RIMM, GG

  6. POT – Potash Corp 12/3/07 • Straight Purchase • $123.84 for 100 Shares = $12,384 • LEAPS Purchase January 2010 (Exp 774) • Deep In The Money vs Out of The Money • Investment Diff = $1250 / B/E Diff = $17.50 • Deep In The Money • $100 Call $52.30 Premium = $5230 B/E $152.30 (Mine was 70c @ $37 on 9/12/07) • In The Money (ITM) • $110 Call $47.80 Premium = $4780 B/E $157.80 • At The Money (ATM) • $120 Call $43.60 Premium = $4360 B/E $163.60 • Out of The Money (OTM) • $130 Call $39.80 Premium = $3980 B/E $169.80 • Straight Purchase vs LEAPS Purchase • Investment Diff = $7154

  7. RIMM – Research In Motion • Straight Purchase • $104.75 for 100 Shares = $10475 • LEAPS Purchase January 2010 (Exp 774) • Deep In The Money vs Out of The Money • Deep In The Money • $90 Call $45.85 Premium = $4585 B/E $135.85 (Mine was 70c @ $33.40 on 9/12/07) • In The Money (ITM) • $100 Call $42.05 Premium = $4205 B/E $142.05 • At The Money (ATM) • $105 Call $40.30 Premium = $4030 B/E $145.30 • Out of The Money (OTM) • $110 Call $38.60 Premium = $3860 B/E $148.60 • Investment Diff = $725 / B/E Diff = $12.75 • Straight Purchase vs LEAPS Purchase • Investment Diff = $5890

  8. GG – Gold Corp 12/3 07 • Straight Purchase • $32.58 for 100 Shares = $3258 • LEAPS Purchase January 2010 (Exp 774) • Deep In The Money vs Out of The Money • Deep In The Money • $20 Call $15.80 Premium = $1580 B/E $35.80 (Mine was 20c @ $11.30 on 9/12/07) • In The Money (ITM) • $30 Call $10.40 Premium = $1040 B/E $40.40 • At The Money (ATM) • $35 Call $8.40 Premium = $840 B/E $43.40 • Out of The Money (OTM) • $40 Call $6.70 Premium = $3860 B/E $46.70 • Investment Diff = $2280 / B/E Diff = $10.90 • Straight Purchase vs LEAPS Purchase • Investment Diff = $1678

  9. Split Strategy • Check News for Split Calendar • Monitor Strong Stocks That Are Nearing Split • Use Investools Split Analysis (Basic Stocks) • As a General Rule the LEAPS Split Strategy is Best for a 2 for 1 Split • Historically a Stock Will Achieve Its Prior Split Value in 24 Months Time • Purchase LEAPS Shortly After Post Split Depression

  10. Sell Current Month Call • Another Way to Increase Account Value • Similar to Stock Covered Call • Allows For Partial to Full Recouping of Original Premium for LEAPS • Want to Sell as Far Out of The Money as Possible to Preserve Original LEAPS • Want to Expire Worthless to Keep Premium • Examples: POT, RIMM, GG

  11. POT 12/3/07 • POT Trading @ $123.84 • Dec 145 @ $1.10 • Dec 140 @ $1.67 • Dec 135 @ $2.60 • Dec 130 @ $4.05 • Dec 125 @ $5.95

  12. RIMM 12/3/07 • RIMM Trading @ $104.75 • Dec 130 @ $1.77 • Dec 120 @ $3.48 • Dec 115 @ $4.72 • Dec 110 @ $6.35 • Dec 105 @ $8.47

  13. GG 12/3/07 • GG Trading @ $32.58 • Dec 40 @ $.07 • Dec 37.5 @ $.20 • Dec 35 @ $.58

  14. More Examples • My Personal Account 12/3/07 • POT • 9/12/07 70c @ 37, Mark 67.55 Profit $3055 • Investment = $3700 Return = 82.57%/3 = 27.52% Monthly or 330.28% Annually • If Straight Purchase on 9/12/07 @ $89.00, Current Close Price $123.84 = $3484 Gain, Return = 39.15%/3 = 13.05% Monthly or 156.6% Annually

  15. More Examples • My Personal Account 12/3/07 • RIMM • 9/12/07 70c @ 33.40, Mark 54.475 Profit $2107.50 • Investment = $3340 Return = 61.31%/3 = 20.44% Monthly or 245.25% Annually • If Straight Purchase on 9/12/07 @ $85.00, Current Close Price $104.75 = $1975 Gain, Return = 23.24%/3 = 7.75% Monthly or 92.9% Annually

  16. More Examples • My Personal Account 12/3/07 • GG • 9/12/07 70c @ 11.30, Mark 15.60 Profit $430 • Investment = $1130 Return = 38.05%/3 = 12.68% Monthly or 152.2% Annually • If Straight Purchase on 9/12/07 @ $27.00, Current Close Price $32.58 = $558 Gain, Return = 20.67%/3 = 6.89% Monthly or 82.67% Annually

  17. I Am Sold on LEAPS • More Conservative Approach • Excellent Tool for IRA, IRRA, 401k • Q & A • Comments

More Related