Long-Term Options Plays: Mohawk, Whole Foods

This was originally published on RealMoney. It is being republished as a bonus for TheStreet.com readers.

You don't often hear the terms "value investing," "fundamental analysis" and "equity options" used in the same sentence. That's because stock options are speculative in nature; they have definite life in which your bet has to play out. In addition, time is not on your side when you buy options, whereas, with stocks, time is an investor's best friend.

Nonetheless, with so many great businesses getting clobbered because of the sloppiness of some of the financial institutions, an investment via long-term options, or LEAPS, can offer a compelling bet: little upfront capital with the possibility of huge gains. But since you are getting involved with a decaying financial instrument, LEAPs should be used on only the most compelling investment ideas.

LEAPS, or long-term equity anticipation securities, are long-term options on a common stock. Generally, LEAPS have a duration of two years, but sophisticated investment firms can create longer-dated LEAPS. ...