See summary. Similarly for corp stocks, but in particular I'm looking at ETFs
Why would you buy ETFs that don't pay dividends vs LEAPs?
- Thread starter nooby_mcnoob
- Start date
If they do start to pay divs you will lose on the leaps.
You don’t want to pay the time value.
You don’t want to pay the higher bid/offer.
You don’t want to pay the time value.
You don’t want to pay the higher bid/offer.
All good points. Though I would say that with high volume options, the spread is usually close enough.
Why would you do it? My experience has been the spread is wider in the options markets than the cash markets for the equivalent delta.
The spread is wider on thinly traded options, you're definitely right there. I don't think I'm smart enough to care about equivalent delta yet...
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Yes;
on a 5 ETF buy or sell, 1 or 2 could be no div....................................................LEAPS make a good gift-most anything make$ a good gift.LOL
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The ETF's might actually be superior. Dividends are reflected in both and the erosion in the leap is the optionality and the carry. Think about it this way - buy the stock and for two years and it does nothing. Pays no dividends and it doesn't move - have you lost money? Of course, you have the lost the carry - few ever count it, but it more visible in the Leap. The optionality(Stock+Put+Net Carry=Call Option. The Leap call has an embedded put and the net carry in the price. So the Leap cost a bit more but has an embedded put.
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Yes;
on a 5 ETF buy or sell, 1 or 2 could be no div....................................................LEAPS make a good gift-most anything make$ a good gift.LOL
I only understand you sometimes
