Are LEAPS a good investment or are just plain old options better?

How do you play LEAPS? How is playing options better than playing LEAPS?

<<<Are LEAPS a good investment or are just plain old options better?>>>

LEAPS are neither better nor worse than shorter term options. The risk characteristics are different, so you want to pick the expiry that you believe has the most attractive risk characteristics.

<<<How do you play LEAPS?>>>

LEAPS prices are more sensitive to changes in implied volatility (IV) so, in general, I prefer to sell LEAPS when I believe IV is going to decrease and buy LEAPS when I believe IV is going to increase.

<<<How is playing options better than playing LEAPS?>>>

The gamma for LEAPS is usually lower than the gamma for shorter term options, so I would rather use a shorter term option if I am going to try to make money due to a prediction of a big change in the price of the underlying.

-----

By the way, I disagree with Andy's reply. He said "The problem with buying LEAPs is that market makers know that most transactions are buy orders, so they bump the prices up to rob us."

It is the fact that more people are interested in buying LEAPS that makes them more expensive, not the market makers. It is also worth noting that LEAPS must cost more than shorter term options. If you could buy a LEAPS contract for the same price as a shorter-term contract you could create risk-free time spreads and put the market makers out of business.

They are great if you know how to use them and it sounds like you don't.

The thing to understand is that no matter what you trade or invest it, there's just about the same order of risk in all of them.

You can do LEAPS and lose or win. You can do options and lose or win.

The problem with buying LEAPs is that market makers know that most transactions are buy orders, so they bump the prices up to rob us.

Leaps are better for a longer term perspective.

If you buy a call you might only have a month for the stock to go up before it expires.
However if you buy a leap you could have 1 or 2 years.

This is a good website that will teach you more about investing.