Calling All Fans!

We're letting tastynation call the shots! Give us your trade idea or let us solve your problems.


Best Practices

Weekdays 8:00 – 8:20a CT

Understanding Leaps

Best Practices

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Longer dated options may seem attractive as they hold on to their value longer which gives the holder more time to be right. But does it make sense to employ a long option strategy?

Looking at the theta curve we see that decay is slower for LEAPs and accelerates as we approach expiration. Additionally, LEAPs tend to display greater volatility which means you will be paying more for the longer duration and the increased premium. Since IV is mean reverting we also see the further out option premium decreasing over time which increases the likelihood of locking in losses by buying OTM premium. All of these factors make long LEAP options especially difficult to make money in.

Best Practices More installments

See All »

Latest tastytrade Videos As of June 24

Most Shared From the last 30 days