LEAPS Options: A Comprehensive Guide to Long-Term Equity Strategies

LEAPS options are derivatives that investors use to reduce their risk in their portfolio. They are also used to speculate by investors and can turn large returns. Long term equity anticipation securities (LEAPs) are simply long term options that  take much longer to expire, when compared with regular options. LEAPs can expire anywhere from a year to three years. This gives investors a lot more time to invest and hedge the market than if regular dated options were used.

LEAP Put

These puts will allow investors to hedge a stock or portfolio for the long term by being given a right to sell at a stated price. This stated price is equivalent to the strike price. Normally, with LEAP options strike prices vary from 25% above, or below, the stock price when the series of LEAPs are first introduced.

LEAP Call

Calls allow speculators to garner magnified rate of returns by allowing them the options to buy at a stated price. If the stock has climbed in price above, and beyond the strike price, the profits are very large.