When it comes to making investments, there are a lot of options to choose from. Some of the most popular choices are LEAPS, stocks and stock options. All three have their pros and cons, so it can be difficult to decide which is the better option for you. In this blog post, we will compare LEAPS, stocks and stock options to help you decide which is the better investment for you!
We discuss:
- The differences between the investments
- The pros and cons of each investment
- Which investment is better for beginners
- Which investing vehicle is best for you
Real quick guys, please hit the like and subscribe buttons below as well as comment and let me know your thoughts on this video.
Also, be sure and grab the FREE Simplified Options Strategies Trading Guide. I’ll put a link down below. It covers the different options strategies setups, how and when to put them on, max profits, and trade management. It’s a great guide to have by your side when trading options.
So let’s get started!
The differences between LEAPS, Stocks and Stock Options
When it comes to LEAPS, stocks and stock options, there are a few key differences that you should be aware of.
LEAPS are long-term investment vehicles, typically lasting for one to 2 years or more. Stocks, on the other hand, can be held for any length of time.
Options have expiration dates and many people trade around 30 to 45 days out.
Another key difference is that LEAPS are typically less expensive than stocks outright. Let’s take a look at Bank of America BC on the Tastyworks trade platform. I’ll put a link down below and you can get a free offer when you open an account. It’s the best options trading platform out there right now.
It currently costs $3,622 to buy 100 shares of Bank of Americal BAC.
To buy the LEAPS option and control the same 100 shares of BAC the cost is $1,705 which is less than half the costs.
Stock options have an expiration date and must be closed or exercised by that date. A key advantage of stock options is that we can sell them in high-volatility environments.
By doing this we can act as the insurance agent vs the client and collect the premiums every month. Or we act as the casino versus the gambler collecting the house rake. They say the house always wins and it is similar with selling options if you do it correctly.
We can make money regardless of the market direction and we don’t have to be 100% right every time!
The pros and cons of LEAPS, Stocks and Stock Options
Each investment vehicle has its own set of pros and cons. When it comes to LEAPS, the main pro
is that they require lower upfront costs as already discussed. They use less Buying Power or BPR.
The main con is that once you are inside of 1 year DTE you will want to roll out another year if you want to keep the long position. This normally is not a big issue since the time decay starts to ramp up inside of 1 year so it is very low cost to roll back to 2 years to allow your position to move up if needed.
The main benefit of stocks is that some stocks pay a dividend. This is additional income. They also offer a longer time frame to make a profit. The downside is they require more capital upfront to purchase.
Stock options have the advantage of being less expensive than stocks and LEAPS. We can also sell them and collect premiums. The main con is that they have an expiration date and must be closed or exercised by that date.
Which investment is better for beginners
When it comes to investing, there is no one-size-fits-all answer. It depends on your goals, risk tolerance and investment timelines. If you are a beginner, we recommend starting with buying stocks through your company 401K if you have one or on your own if you don’t. The next step is options including LEAPS which are options.
Which investing vehicle is best for you
The best investment vehicle for you depends on your goals, risk tolerance and investment timelines. If you are already investing conservatively in a stock account for retirement that is great! This is the first step.
If you are looking for another way to grow a separate account on the side faster or as a side business then you may want to consider stock options including LEAPS. Ultimately, the best investment vehicle is the one that aligns with your goals and meets your needs.
Alright guys, please hit the like and subscribe buttons below as well as comment and let me know if you have any questions about LEAPS, stocks or stock options
Also, be sure and grab the FREE Simplified Options Strategies Trading Guide. I’ll put a link down below. It covers the different options strategies setups, how and when to put them on, max profits, and trade management. It’s a great guide to have by your side when trading options.
Thanks for watching and see you in the next one!