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+Chapter 25: LEAPS 401 
+LEAPS calls may help to alleviate this problem. Since they are such long-term 
+calls, they are likely to have some time value premium in them. In-the-money calls that 
+have time value premium are not normally assigned. As an alternative to shorting a 
+stock that is not borrowable, one might try to sell an in-the-money LEAPS call, but 
+only if it has time value premium remaining. Just because the call has a long time 
+remaining until expiration does not mean that it must have time value premium, as will 
+be seen in the following discussion. Finally, if one does sell the LEAPS call, he must 
+realize that if the stock drops, the LEAPS call will not follow it completely. As the stock 
+nears the strike, the amount of time value premium will build up to an even greater 
+level in the LEAPS. Still, the naked call seller would make some profit in that case, and 
+it presents a better alternative than not being able to sell the stock short at all. 
+Early Assignment. An American-style option is one that can be exercised at any 
+time during its life. All listed equity options, LEAPS included, are of this variety. 
+Thus, any in-the-money option that has been sold may become subject to early 
+assignment. The clue to whether early assignment is imminent is whether there is 
+time value premium in the option. If the option has no time value premium - in other 
+words, it is trading at parity or at a discount then assignment may be close at hand. 
+The option writer who does not want to be assigned would want to cover the option 
+when it no longer carries time premium. 
+LEAPS may be subject to early assignment as well. It is possible, albeit far less 
+likely, that a long-term option would lose all of its time value premium and therefore 
+be subject to early assignment. This would certainly happen if the underlying stock 
+were being taken over and a tender off er were coming to fruition. However, it may 
+also occur because of an impending dividend payment, or more specifically, because 
+the stock is about to go ex-dividend. Recall that the call owner, LEAPS calls includ­
+ed, is not entitled to any dividends paid by the underlying stock. So if the call owner 
+wants the dividend, he exercises his call on the day before the stock goes ex-dividend. 
+This makes him an owner of the common stock just in the nick of time to get the div­
+idend. 
+What economic factors motivate him to exercise the call? If there is any time 
+value premium at all in the call, the call holder would be better off selling the call in 
+the open market and then purchasing the stock in the open market as well. In this 
+manner, he would still get the dividend, but he would get a better price for his call 
+when he sold it. If, however, there is no time value premium in the call, he does not 
+have to bother with two transactions in the open market; he merely exercises his call 
+in order to buy stock. 
+All well and good, but what makes the call sell at parity before expiration? It has 
+to do with the arbitrage that is available for any call option. In this case, the arbitrage