What Are Leap Options?

Leap options, also known as Long-term Equity Anticipation Securities, are options contracts with a longer time to expiration than most traditional options. Generally, a leap option has an expiration date that is more than a year away from the current date.

Leap options are used by investors who want to take a long-term position in a particular stock or asset. By purchasing a leap call option, an investor has the right to buy the underlying asset at the strike price at any time before the expiration date. Similarly, a leap put option gives the investor the right to sell the underlying asset at the strike price at any time before the expiration date.

One advantage of leap options is that they offer more time for a trade to play out, allowing investors to potentially benefit from longer-term trends in the market. However, because leap options have a longer expiration date, they also tend to be more expensive than shorter-term options.

Leap options can be used for a variety of trading strategies, including hedging, income generation, and speculation. They are especially useful for investors who have a long-term view on a particular stock or asset and want to take advantage of potential price movements over an extended period of time.