Anyone trade these LEAP calls before?

Yes, to answer your question. It allows a long or short position for less capital outlay in its simplest form, and it allows a loss certain in each case. The loss certain is obviously much less than either buying, or short selling the underlying security, or commodity.

It allows a whole bunch of other things as well, but for the average investor, the above explanation is basically it.

Warren Buffett, who has publically said several times derivatives are bad, has interestingly enough also used leap puts extensively. He has hinted in one of his letters that there is opportunity in leaps due to market inefficiencies.

Purchasing a call or put, or leap call or leap put, is one of the safest, most conservative form of investing that there is, contrary to what others have written.

Bigfalla is talking above (loosely) about a bull call calendar spread above. I think what he is referring to is buying higher strike price leap calls, and selling calls monthly at an even higher strike. To oversimplify, the loss potential here is the difference between strike prices.

Selling naked, or partially naked calls is not something most would want to do unless they fully understood what they're doing.

Literally, and it might be too late now, there was leap call opportunity in oil (as a stock option USO) natural gag (as a stock option UNG) and silver (as a stock option SLV). The pricing models were way out of whack, and I traded all three.

So on oil as an example, rather than attempt to guess the bottom for Conco as an example, I went long leaps calls on USO.

Now those are three recent things that aligned perfectly for me. Meaning I thought it was a no brainer, and I follow all three commodities fairly closely.

The way I invest, trade if you want to call it that, might mean in my case, there might not be another opportunity like the above three for several years.

Great post Iowa Golfer.

I think you basically have it. Buying a put or call, is called a long put, or long call. Your maximum loss is the costs associated with the acquisition, including price.

I'm going to speak briefly to two items in your post I'll quote below:

quote:

---

Resell my option if the price of the option rises above $10, but this is a highly unlikely event as options decrease in value as the expiry date approaches, unless the stock rises significantly, in which case, its better to just exercise the option.

---

The price doesn't always logically decrease closer to expiry, especially with respect to leaps, as they are so far out. Your CVX long leap call could very well be worth more than $10, even while the price of CVX might be below your strike price in the example you gave. Options are very rarely exercised, they are sold to close in the examples you gave, both long call and put. Sell it, either at a gain, or at a loss. Plenty of liquidity (for the most part) in CVX options, less so in their leaps if you look at the open interest.

quote:

---

gain 'bigly'.

---

Buying and selling options is work. Spread trades, certainly more work (buy one call or put, sell one call or put). Naked and exotic trades even more so. Long calls and puts, and covered calls are the least work, but still work. I'd suggest it had better be work, becuase when viewed as work, there is less failure involved. Failure in this instance is losing money. It's gone when you fail. Work is sometimes not fun, and losing money is never fun. Better to take on the not fun part of this on the front end rather than the back end.

"Bigly" is Big League. I think you know this. Some on PT know this as well, but troll with it, and some are willfully ignorant about it. For whatever reason, it's a pet peeve of mine. Once a year, in the winter, I go fishing in the North Georgia mountains. They talk differently than I do in Iowa. Unless there is a compelling reason, I don't make fun of their accents. Nor do I make fun of a New York City accent. It drives me nuts that some very educated persons over on PT make fun of some guy's accent. Now I'm not trying to be a prick, and my statement could come across that way. I just felt compelled to explain "bigly". I hope both of us win at some level of "bigly". The Cubs are winning. Even the Hawkeyes won last year. I think the Rangers are winning. As part of my due diligence, when sports teams like this win, I think I'll win also. We all get lucky.