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In comparing the premium cost of a LEAPS option with a premium of a traditional option on the same security and same strike price, which of the following is generally true?
Suggested Answer: B
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the LEAPS premium will be higher than the traditional option premium. Because LEAPS have a longer time until expiration than traditional options, the premium should be higher.
12 comments · newest first
GE
Gerri
1 year ago
I think D is misleading; LEAPS definitely consider time value.
AB
Abel
1 year ago
Yeah, I've seen LEAPS cost more than traditional options.
TR
Trevor
1 year ago
Wait, are you sure about that? I thought they were similar.
KA
Kallie
1 year ago
Totally agree, B is the way to go!
LI
Lisbeth
1 year ago
LEAPS premiums are usually higher due to longer time frames.
TI
Tiffiny
1 year ago
I vaguely recall that traditional options might have higher premiums sometimes, but that seems counterintuitive for LEAPS.
LA
Latonia
1 year ago
I thought the premiums would be similar, but now that I think about it, LEAPS should have more time value, right?
SH
Sherell
1 year ago
I think I remember that LEAPS options usually have a longer time until expiration, so their premiums might be higher.
KA
Kathryn
1 year ago
I'm not entirely sure, but I feel like I saw a practice question where LEAPS were definitely more expensive than regular options.
MA
Marleen
1 year ago
I'm a little confused by the wording here. I'll have to re-read the question a few times to make sure I understand it fully before answering.
AN
Annalee
1 year ago
Hmm, I'm a bit unsure about this one. I'll need to review the details on triggers, schedulable classes, and batchable classes to decide which option would be best.
LI
Linsey
1 year ago
Okay, let me see. I remember learning about BootP and how it was an early protocol for diskless workstations to boot from a server. I'm pretty confident that's the right answer here.