Look Before You LEAP

Q: What are LEAPs? - T.C., Oxnard, Calif.

 A: They're simply long-term options - ones that expire after more than a year from their issue date. Remember that a standard option lets you purchase the right to buy (via "call" options) or sell (via "put" options) a fixed number of shares of a stock at a fixed price within a fixed time period, typically a few months.

So if you think that Rubber Chicken Catering (ticker: CHEWY), which is trading at $40 today, will soon be at $60, you might buy call options for $6 per share that let you buy the shares at $45. That will ultimately cost you $51 per share, netting you a $9 profit - but only if the stock hits your target before the expiration date. Options such as these often end up expiring as worthless. That's why LEAPs, with their longer time frames, can be more attractive, despite costing more.

Options are not for beginning investors, and many advanced investors steer clear, too. Still, they can sometimes make sense. Learn more at www.cboe.com/ learncenter, www.fool.com/foolFAQ/ foolfaq0055.htm, and by clicking on "Options" in the blue band at www.fool. com/investing.htm.

Q: How can I tell if a company is owned by (or owns) another company?

- J.P., Jacksonville, Fla.

 A: You can call the firm and ask its Investor Relations department. You can also visit its Web site. Most major companies have informative ones - look for a link titled something like "About Us," "Company Profile" or "Our History." A search at google.com can also yield valuable info.

You may be surprised which companies are related. Yum! Brands, for example, owns Taco Bell, Pizza Hut and KFC, among other names. Gap owns Old Navy, Banana Republic and Piperlime.

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