Legal

Risk Disclosure

General investment risk. All investing involves risk, including possible loss of principal. Markets can be volatile, and the value of securities can decline rapidly. Diversification and asset allocation do not guarantee a profit or protect against loss.

Options and LEAP-specific risks

A long-term equity anticipation security (“LEAP”) is a long-duration option contract. Options, including LEAPs, carry risks that may not be suitable for all investors:

• Total loss of premium. A long call option can expire worthless. The buyer can lose 100% of the premium paid.
• Time decay. Options lose value as they approach expiration, all else equal. This effect accelerates in the final weeks before expiry.
• Volatility risk. Option prices are sensitive to changes in implied volatility; a drop in volatility can reduce an option’s value even if the underlying moves favorably.
• Liquidity risk. Options on less-followed stocks may have wide bid-ask spreads and low trading volume, resulting in poor fills and difficulty exiting.
• Assignment and early exercise. Short option positions (not recommended on this site) carry additional risks including early assignment and theoretically unlimited loss.
• Leverage. Options provide leverage, which magnifies both gains and losses.

Before trading options you should read the Options Clearing Corporation’s Characteristics and Risks of Standardized Options (the “ODD”), which your broker is required to provide. Your broker may also require you to complete an options-trading suitability review before approving you for options trading.

Performance figures

Any performance figures presented on this site (including track-record pages) reflect the price movement of the underlying equity from a stated entry date. They do not reflect actual trades, do not account for commissions, spreads, slippage, taxes, or the performance of any specific option contract. LEAP performance, in particular, will differ materially from the performance of the underlying stock due to leverage, time decay, and volatility. Figures shown are illustrative only.

Do your own due diligence

You are solely responsible for your own investment decisions. Consult a qualified licensed financial professional before acting on any content published on this site.