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Treasury Management Magazine
The Novel Option: LEAPS
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The lure of investment is far from over for investors. The story of options and option strategies are yet to take a formal shape and here comes an option that opens a new sphere of investment stratagem. LEAPSLong-term Equity Anticipation Securities are providing investors with a wide range of investment alternatives and opportunities to make investments for a longer term. So a lesser amount is at risk for a longer time to benefit from appreciation in the price of the underlying.

Options are one of the seven wonders in the investment world and remaining six are option products. These are capable of immense mathematical and investment manipulations and almost any investment scenario can be replicated by combinations of these options. Interestingly, they not only complete the market but have also created a market of their own. That is why we have more innovations in the options market than in any other market today.

Equity options are well understood today and they are very much part of the daily financial reporting. They not only help in risk management but more so in money management. Terms like risk management with options are not more compatible than any another avenue for money management. For instance, if an investor is long on a stock and wants to hold it for some more time but he is unsure about the upward movement of the stock price, the best he can do is to short out-of-the-money call options. That will bring him cash flow and the net holding of the stock price will eventually fall.

 
 
 

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