{"id":3573,"date":"2025-04-02T18:05:48","date_gmt":"2025-04-02T18:05:48","guid":{"rendered":"https:\/\/logicinv.com\/blog\/?p=3573"},"modified":"2025-04-07T22:29:44","modified_gmt":"2025-04-07T22:29:44","slug":"leaps-options-how-to-buy-stocks-at-a-70-discount","status":"publish","type":"post","link":"https:\/\/logicinv.com\/blog\/options-trading\/leaps-options-how-to-buy-stocks-at-a-70-discount\/","title":{"rendered":"LEAPS Options: How to Buy Stocks at a 70% Discount"},"content":{"rendered":"<p>\n  LEAPS options offer a unique way for investors to gain long-term exposure to stocks.<br \/>\n  While the claim of buying stocks at a guaranteed 70% discount is an oversimplification,<br \/>\n  LEAPS can be used strategically to potentially acquire shares at a lower cost basis.<br \/>\n  This article explores how LEAPS options work and how to use them to your advantage.\n<\/p>\n<h2>Understanding LEAPS Options<\/h2>\n<p>\n  LEAPS (Long-term Equity Anticipation Securities) are long-term options contracts with<br \/>\n  expiration dates that are typically a year or more in the future. They offer investors<br \/>\n  exposure to a stock&#8217;s price movement over an extended period.\n<\/p>\n<h2>Key Concepts<\/h2>\n<ul>\n<li>\n    <strong>Call Option:<\/strong> Gives the buyer the right, but not the obligation, to buy 100 shares of a stock at a specific price (strike price) before the expiration date.\n  <\/li>\n<li>\n    <strong>Put Option:<\/strong> Gives the buyer the right, but not the obligation, to sell 100 shares of a stock at a specific price (strike price) before the expiration date.\n  <\/li>\n<li>\n    <strong>In-the-Money (ITM):<\/strong> A call option is ITM when the stock price is above the strike price. A put option is ITM when the stock price is below the strike price.\n  <\/li>\n<li>\n    <strong>Out-of-the-Money (OTM):<\/strong> A call option is OTM when the stock price is below the strike price. A put option is OTM when the stock price is above the strike price.\n  <\/li>\n<\/ul>\n<h2>The &#8220;70% Discount&#8221; Illusion<\/h2>\n<p>\n  The idea of buying stocks at a 70% discount using LEAPS comes from buying deeply<br \/>\n  in-the-money (ITM) call options.\n<\/p>\n<p>\n  Example:\n<\/p>\n<ul>\n<li>  Stock Price: $100<\/li>\n<li>  1-Year LEAPS Call Option Strike Price: $30<\/li>\n<li>  Option Premium: $72<\/li>\n<\/ul>\n<p>\n  In this case, the option costs $72 per share, and you have the right to buy the stock at $30. It might seem like you&#8217;re paying $102 for a $100 stock (strike price + premium), which is a discount compared to buying it outright.\n<\/p>\n<p>\n  However, this is an illusion. You&#8217;re paying the premium for the right to buy the stock at the strike price, not for the stock itself.\n<\/p>\n<h2>How to Use LEAPS Strategically<\/h2>\n<p>\n  While the &#8220;70% discount&#8221; is misleading, LEAPS can be used strategically:\n<\/p>\n<h3>1. Long-Term Bullish Bets<\/h3>\n<p>\n  Buy ITM LEAPS call options on stocks you believe will significantly increase in price over the long term. This can be a way to gain exposure with less capital outlay than buying the stock outright.\n<\/p>\n<h3>2. Capital Efficiency<\/h3>\n<p>\n  LEAPS can be more capital-efficient than buying the stock, freeing up funds for other investments.\n<\/p>\n<h3>3. Leverage (Use with Caution)<\/h3>\n<p>\n  LEAPS provide leverage, meaning your percentage gains can be magnified, but so can your losses.\n<\/p>\n<h3>4. Income Generation (Covered Calls)<\/h3>\n<p>\n  After acquiring shares through LEAPS, you can sell shorter-term call options against them to generate income (covered call strategy).\n<\/p>\n<h2>Risks of LEAPS Options<\/h2>\n<ul>\n<li>  <strong>Time Decay:<\/strong> Options lose value over time, especially as expiration approaches.<\/li>\n<li>  <strong>Volatility:<\/strong> Options prices are sensitive to changes in volatility.<\/li>\n<li>  <strong>Limited Upside:<\/strong> Your profit is limited to the stock price increase minus the premium paid.<\/li>\n<li>  <strong>Total Loss:<\/strong> You can lose your entire investment if the option expires worthless.<\/li>\n<\/ul>\n<h2>Important Considerations<\/h2>\n<ul>\n<li>  <strong>Stock Selection:<\/strong> Choose financially sound companies with long-term growth potential.<\/li>\n<li>  <strong>Strike Price:<\/strong> Select a strike price that aligns with your bullish outlook.<\/li>\n<li>  <strong>Timeframe:<\/strong> Give yourself ample time for the stock to move in your favor.<\/li>\n<li>  <strong>Risk Tolerance:<\/strong> Assess your comfort level with the potential for losses.<\/li>\n<\/ul>\n<h2>Conclusion<\/h2>\n<p>\n  LEAPS options can be a valuable tool for long-term investors seeking capital efficiency and<br \/>\n  potential leverage. However, the &#8220;70% discount&#8221; claim is a simplification, and investors<br \/>\n  must understand the risks involved. Careful stock selection, strike price selection, and<br \/>\n  risk management are essential for successful LEAPS trading.\n<\/p>\n<h2>Related Keywords<\/h2>\n<p>\n  LEAPS options, long-term equity anticipation securities, LEAPS trading strategy, LEAPS<br \/>\n  call options, LEAPS put options, options trading, options trading for beginners, options<br \/>\n  leverage, options investing, options strategies.\n<\/p>\n<h2>Frequently Asked Questions (FAQ)<\/h2>\n<div itemscope itemtype=\"https:\/\/schema.org\/FAQPage\">\n<div itemscope itemprop=\"mainEntity\" itemtype=\"https:\/\/schema.org\/Question\">\n<h3 itemprop=\"name\">1. What are LEAPS options?<\/h3>\n<div itemscope itemprop=\"acceptedAnswer\" itemtype=\"https:\/\/schema.org\/Answer\">\n<p itemprop=\"text\">\n        LEAPS (Long-term Equity Anticipation Securities) are long-term options contracts with expiration dates that are typically a year or more in the future.\n      <\/p>\n<\/p><\/div>\n<\/p><\/div>\n<div itemscope itemprop=\"mainEntity\" itemtype=\"https:\/\/schema.org\/Question\">\n<h3 itemprop=\"name\">2. What is a call option?<\/h3>\n<div itemscope itemprop=\"acceptedAnswer\" itemtype=\"https:\/\/schema.org\/Answer\">\n<p itemprop=\"text\">\n        A call option gives the buyer the right, but not the obligation, to buy 100 shares of a stock at a specific price (strike price) before the expiration date.\n      <\/p>\n<\/p><\/div>\n<\/p><\/div>\n<div itemscope itemprop=\"mainEntity\" itemtype=\"https:\/\/schema.org\/Question\">\n<h3 itemprop=\"name\">3. What is a put option?<\/h3>\n<div itemscope itemprop=\"acceptedAnswer\" itemtype=\"https:\/\/schema.org\/Answer\">\n<p itemprop=\"text\">\n        A put option gives the buyer the right, but not the obligation, to sell 100 shares of a stock at a specific price (strike price) before the expiration date.\n      <\/p>\n<\/p><\/div>\n<\/p><\/div>\n<div itemscope itemprop=\"mainEntity\" itemtype=\"https:\/\/schema.org\/Question\">\n<h3 itemprop=\"name\">4. What does &#8220;in-the-money&#8221; (ITM) mean for an option?<\/h3>\n<div itemscope itemprop=\"acceptedAnswer\" itemtype=\"https:\/\/schema.org\/Answer\">\n<p itemprop=\"text\">\n        A call option is ITM when the stock price is above the strike price. A put option is ITM when the stock price is below the strike price.\n      <\/p>\n<\/p><\/div>\n<\/p><\/div>\n<div itemscope itemprop=\"mainEntity\" itemtype=\"https:\/\/schema.org\/Question\">\n<h3 itemprop=\"name\">5. What does &#8220;out-of-the-money&#8221; (OTM) mean for an option?<\/h3>\n<div itemscope itemprop=\"acceptedAnswer\" itemtype=\"https:\/\/schema.org\/Answer\">\n<p itemprop=\"text\">\n        A call option is OTM when the stock price is below the strike price. A put option is OTM when the stock price is above the strike price.\n      <\/p>\n<\/p><\/div>\n<\/p><\/div>\n<div itemscope itemprop=\"mainEntity\" itemtype=\"https:\/\/schema.org\/Question\">\n<h3 itemprop=\"name\">6. Can I really buy stocks at a 70% discount with LEAPS?<\/h3>\n<div itemscope itemprop=\"acceptedAnswer\" itemtype=\"https:\/\/schema.org\/Answer\">\n<p itemprop=\"text\">\n        The &#8220;70% discount&#8221; idea is misleading. You&#8217;re paying a premium for the right to buy the stock at the strike price, not for the stock itself.\n      <\/p>\n<\/p><\/div>\n<\/p><\/div>\n<div itemscope itemprop=\"mainEntity\" itemtype=\"https:\/\/schema.org\/Question\">\n<h3 itemprop=\"name\">7. How can LEAPS be used strategically?<\/h3>\n<div itemscope itemprop=\"acceptedAnswer\" itemtype=\"https:\/\/schema.org\/Answer\">\n<p itemprop=\"text\">\n        LEAPS can be used for long-term bullish bets, capital efficiency, leverage (with caution), and income generation through covered calls.\n      <\/p>\n<\/p><\/div>\n<\/p><\/div>\n<div itemscope itemprop=\"mainEntity\" itemtype=\"https:\/\/schema.org\/Question\">\n<h3 itemprop=\"name\">8. What are the risks of trading LEAPS options?<\/h3>\n<div itemscope itemprop=\"acceptedAnswer\" itemtype=\"https:\/\/schema.org\/Answer\">\n<p itemprop=\"text\">\n        Risks include time decay, volatility, limited upside potential, and the potential for total loss if the option expires worthless.\n      <\/p>\n<\/p><\/div>\n<\/p><\/div>\n<div itemscope itemprop=\"mainEntity\" itemtype=\"https:\/\/schema.org\/Question\">\n<h3 itemprop=\"name\">9. What are the key factors to consider when trading LEAPS?<\/h3>\n<div itemscope itemprop=\"acceptedAnswer\" itemtype=\"https:\/\/schema.org\/Answer\">\n<p itemprop=\"text\">\n        Consider stock selection, strike price selection, timeframe, and your risk tolerance.\n      <\/p>\n<\/p><\/div>\n<\/p><\/div>\n<div itemscope itemprop=\"mainEntity\" itemtype=\"https:\/\/schema.org\/Question\">\n<h3 itemprop=\"name\">10. Are LEAPS a suitable investment for beginners?<\/h3>\n<div itemscope itemprop=\"acceptedAnswer\" itemtype=\"https:\/\/schema.org\/Answer\">\n<p itemprop=\"text\">\n        LEAPS can be complex and involve significant risk. They are generally more suitable for experienced investors with a good understanding of options.\n      <\/p>\n<\/p><\/div>\n<\/p><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>LEAPS options offer a unique way for investors to gain long-term exposure to stocks. While the claim of buying stocks at a guaranteed 70% discount is an oversimplification, LEAPS can be used strategically to potentially acquire shares at a lower cost basis. This article explores how LEAPS options work and how to use them to<\/p>\n","protected":false},"author":5,"featured_media":3574,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jsonld_meta":"{\r\n  \"@context\": \"https:\/\/schema.org\",\r\n  \"@type\": \"Article\",\r\n  \"mainEntityOfPage\": \"https:\/\/logicinv.com\/blog\/options-trading\/leaps-options-how-to-buy-stocks-at-a-70-discount\/\",\r\n  \"headline\": \"LEAPS Options: How to Buy Stocks at a 70% Discount\",\r\n  \"description\": \"LEAPS options offer a unique way for investors to gain long-term exposure to stocks. While the claim of buying stocks at a guaranteed 70% discount is an oversimplification, LEAPS can be used strategically to potentially acquire shares at a lower cost basis.\",\r\n  \"image\": {\r\n    \"@type\": \"ImageObject\",\r\n    \"url\": \"https:\/\/logicinv.sfo2.digitaloceanspaces.com\/blog\/wp-content\/uploads\/2025\/04\/02180537\/LEAPS-Options-How-to-Buy-Stocks-at-a-70-Discount.jpeg\",\r\n    \"width\": 1024,\r\n    \"height\": 576\r\n  },\r\n  \"author\": {\r\n    \"@type\": \"Person\",\r\n    \"name\": \"Editor Team\",\r\n    \"url\": \"https:\/\/logicinv.com\/blog\/author\/editor\/\"\r\n  },\r\n  \"publisher\": {\r\n    \"@type\": \"Organization\",\r\n    \"name\": \"LogicInvest\",\r\n    \"url\": \"https:\/\/logicinv.com\/blog\",\r\n    \"logo\": {\r\n      \"@type\": \"ImageObject\",\r\n      \"url\": \"https:\/\/logicinv.com\/blog\/wp-content\/uploads\/2025\/04\/logicinvest-logo.png\"\r\n    }\r\n  },\r\n  \"datePublished\": \"2025-04-02T18:05:48+00:00\",\r\n  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