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According to the CBOE Volatility Index (VIX), volatility is very low right now.

Why does that matter?

Well, volatility is a major component of the Black-Scholes options pricing model…

And this model largely determines the options prices you end up seeing on your screen.

The truth is…

The current low volatility is leading to a perfect opportunity to buy a certain type of option.

With volatility so low, options have become cheaper than usual, which means now is a great time to buy them… especially long-term options, also known as long-term equity anticipation securities (LEAPS).

LEAPS’ expiration dates are further into the future than regular options’ expiration dates. That means a LEAPS option gives you more time to potentially profit from a big price move in the underlying asset.

And, in case the price doesn’t move, you also have more time to potentially profit from an increase in volatility.

That’s why now is such a good time to buy LEAPS. If the VIX were to double, it would still be below its 52-week highs.

And that could happen for a variety of reasons…

War…

Recession fears…

Another rate hike…

More bank failures…

Election fearmongering…

You name it.

And if the VIX increases, the volatility component of the Black-Scholes model would also increase, which means your option could become more valuable even without a rise in the underlying share price.

Of course, that’s not the reason you buy LEAPS.

You buy LEAPS for the same reason you buy regular options: to capitalize on a directional move in the underlying shares. The difference is LEAPS give you much longer time frames, so you can avoid the stress of short-term volatility.

Here are five reasons to buy LEAPS today:

1. Long-term exposure

LEAPS options provide investors with extended time frames to capture potential price movements in the underlying assets. These longer expiration periods allow for greater flexibility and the ability to ride out short-term market fluctuations.

2. Cost-efficiency

Compared with buying or selling the underlying asset itself, a LEAPS option can offer a more cost-effective way to gain exposure to price movements. The premium for a LEAPS option is typically less than the cost of purchasing the underlying asset outright.

3. Leverage

Options, including LEAPS, allow investors to control larger amounts of the underlying assets with a smaller capital outlay. This leverage amplifies the potential gains if the market moves in the expected direction. However, it’s important to note that leverage can also magnify losses if the market moves against the position.

4. Risk management

LEAPS options provide a defined risk profile. When you buy options, your maximum potential loss is limited to the premium you pay. This can help you manage risk and protect against unexpected adverse price movements.

5. Strategic opportunities

LEAPS options can be utilized for various investment strategies, such as long-term bullish or bearish positions, writing covered calls to generate income, or hedging existing positions. These strategies offer investors additional flexibility and potential profit opportunities.

YOUR ACTION PLAN

While my colleague Bryan Bottarelli is known for his short-term strangles (also known as Overnight Trades), I love long-term plays like LEAPS, and I trade them all the time in The War Room. They’ve led to some big profits on both the call side and the put side. If you’re ready, it’s high time you started trading alongside Bryan and me as we crush the markets – just as we did in May. We had a 92% win rate last month thanks to some of our biggest winners of the year… including a 293% overnight return on Advance Auto Parts (NYSE: AAP).

Click here to unlock The War Room and start playing these markets like a pro.