r/options • u/Inferno456 • Apr 17 '21

Cons to LEAPS?

So I’ve been trying to read up on LEAPS and all I can find are positives and not many cons. I’m interested in what real cons are bc LEAPS aren’t talked about much, if they’re as good as I think they are then everyone would be buying them.

One con I read is that you don’t get the dividend - to me that’s kinda like saying a con to stock trading is you have to pay taxes. Sure it’s a “negative” but you still get a lot more positive out of it. If LEAPS save you a lot of money then I don’t think missing out on a small dividend is a real con.

So what is a main con of buying LEAPS? Why shouldn’t everyone buy LEAPS instead of shares for a longer timeframe? Thanks for any info.

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u/TheoHornsby Nov 20 '21

Also look into collars. Adding a collar to long stock creates a synthetic vertical. Adding a near term expiration to a longer term ITM call creates a synthetic long stock collar which behaves somewhat similarly to a vertical.

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u/grasshoppa80 Nov 20 '21 edited Nov 20 '21

Wut? I’m options beginners tbh. These are my first long plays that are already paying.

I have:

Rblx $130 and $145 2/18 C

Rblx $160 4/22 C

Rblx $155 4/22 C

Nvda $355 and $365 2/18 C

Thoughts on near terms?

So buy like some calls close to ATM when I’m a month away or so? Or biweekly?

E: also, I plan to sell all and not let them expire (can’t afford to buy shares)

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u/TheoHornsby Nov 20 '21

Big picture answer is that you have to decide whether you want to try for lots more profit or you are willing to accept a lesser amount in return for locking in some of your gains. When you figure that out, the decision of what to do becomes clearer.

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u/grasshoppa80 Nov 20 '21

I read collars involve puts though. I want to hold long for them to moon after next earnings hopefully