If you like the idea of investing in stock options, but the idea of only having a few months for your investment strategies to play out doesn't seem just right, you might want to look into LEAPs.
LEAPs, Long-Term Equity AnticiPation Securities, are options which have much longer expiration periods. Generally, LEAPs are purchased for terms exceeding 12 months and up to almost 3 years (2 years and 8 months specifically).
LEAPs work on the same basic structure as other stock options, namely that they are available in their most basic form as Call Options, and Put Options. The Call Option is the right, but not the obligation to buy the stock at a set price and the Put Option is the right, but not the obligation to sell the stock at the set price.
Like all stock options, LEAPs are priced on a combination of their intrinsic value and another value based on both the historical volatility of the stock and the amount of time until the option expires. As such, LEAPs are generally more expensive than standard options. Also, LEAPs are not as commonly traded as other types of options, so there may be some limited availablity of them depending upon the stock in question. The larger and more widely trade the stock, the more likely it is for there to be a LEAP option available.
LEAP strategies can be used like other option strategies and combined to produce things like a straddle. However, with their longer term LEAPs are best used on strategies that are not dependant on high volatility.
One of the most common uses of LEAP options is to hedge either a position in a portfolio or by hedging against the market overall.
Take a look at LEAPs and see if they might be a good options for your portfolio.