Read this first. Options are not a safer way to own a stock. A call bought for $2,000 can be worth nothing at expiry if the stock ends below the strike, and the leverage that makes a LEAP cheap works just as hard on the way down. Quotes here are delayed, midpoints between bid and ask; the price you would actually get can be worse. Educational research only, not investment advice.
Tonight’s puts
Puts 5–10% below today’s price, about one and two years out, on the S&P 500 (SPY) and the Nasdaq-100 (QQQ). A put gains as the index falls below its strike, so it can offset part of a portfolio’s loss in a deep pullback. The cost is what that insurance runs per year, as a share of the index.
| Index | Put | Below today | Cost per contract | Cost, % of index | Per year | Liquidity |
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What can go wrong
A LEAP has an expiry date: the stock can be right in two years and the call still expire worthless if the move comes too late. A deep in-the-money call does not collect dividends. A Poor Man’s Covered Call caps the upside for each month a call is sold, and can be assigned early. Puts cost money every year in which nothing bad happens. And a company passing every filter here says only that the arithmetic and the option market line up tonight; it is not a forecast and not a recommendation.
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