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LEAPS, or Long-term Equity Anticipation Securities[1], a product developed in 1990 by the Chicago Board Options Exchange (CBOE), are long-dated put and call options on common stocks, equity indexes or American depositary receipts (ADRs). Available on more than 1,000 financial products at all six U.S. options exchanges, they account for approximately 10 percent of all options listed.[2]


These long-term options provide the holder the right to purchase, in the case of a call, or sell in the case of a put, a specified number of stock shares (or an equity index) at a pre-determined price up to the expiration date of the option, which can be three years in the future. This is the distinction between LEAPS and more traditional security options -- the long-dated nature of LEAPS.

Because of long dating, LEAPS allow investors to buy and hold a market position for an extended period of time. Thus, investors do not need to predict precise timing of the market movements to profit — instead, they need to correctly predict market trends over time.

LEAPS calls give investors with a medium- to long-term investment view the ability to participate in the upward (or downward) movement of a stock without making an outright stock purchase. LEAPS puts can provide a medium to long-term insurance (or hedge) for stock owners in the event of a substantial decline in their stocks.

Like traditional equity options, the owner (or holder) of an Equity LEAPS call has the right to purchase, or sell in the case of a put, a pre-determined amount of stock (the standarized contract size), at a pre-determined price, called the strike price, for a specified period of time. LEAPS contracts expire in January of their expiration year.

LEAPS are quoted and traded just like any other exchange-listed option. In fact, many of the features of LEAPS are the same for shorter-term options (see full contract specifications):

  • Number of shares covered by the contract (100)
  • Exercise and assignment procedures
  • Trading procedures
  • Margin and commission costs

However, LEAPS differ from shorter-term options in several ways including availability, pricing, time erosion vs. delta effect, symbols and strategies.

Transacting LEAPS[edit]

Like other equity options, transacting LEAPS must be done through a broker-dealer (B-D) or through an online trading network affiliated with a B-D. LEAPS are traded on a variety of products (but not all) on all U.S. options exchanges.

How Are LEAPS Added?[edit]

Several factors impact the availability of LEAPS. When options are listed for trading on a particular stock, most times LEAPS are not immediately available. After a period of time, and if interest warrants it, the exchanges listing the shorter-term options may decide to list LEAPS options, after consulting with the market makers or specialists assigned to trade the stock options. The reason for this is that LEAPS options are difficult to price because of their long life. The exchanges ensure that sufficient interest is present in the market, and that market makers or specialists are prepared to price and trade longer-dated options once they are listed. The result is that LEAPS are not available on every stock which has options traded on it. LEAPS are initially listed with three strike prices, at the current price and 20 to 25% above and below the price of the underlying stock. Strikes may be added as the underlying stock moves. LEAPS only have one expiration month: January in two different years.

As LEAPS draw within one year of their expiration and it becomes necessary to list new LEAPS® series, the existing LEAPS options continue to be listed and traded until their expiration. However, because of the shorter length of time until expiration, they then trade as ordinary shorter-term options and they lose their distinctive LEAPS symbols. New LEAPS options with expiration dates in the future are then added.[3]

LEAPS Availability[edit]

Options Industry Council provides a complete list of products on which LEAPS are available. [4]

LEAPS Contract Specifications[edit]

Options Industry Council lists LEAPS specifications as follows: [5]

Trading Unit: Generally 100 shares of stock per unadjusted contract.

Premium (Price) Quotations: Stated in points and decimals; one point equals $100. The minimum price change for series trading below 3 is 0.05 ($5) and for all other series is 0.10 ($10) per contract.

Exercise: Equity LEAPS are American-style options. The option may be exercised prior to the expiration date.

Exercise Settlement: A holder that tenders an exercise notice on any business day will receive delivery of the underlying stock on the fifth business day following the date of exercise. The exercise settlement price equals the strike price multiplied by 100 (multiplier) for unadjusted series.

Expiration Cycle: Equity LEAPS expire in January of each year.

Expiration Date: Expiration occurs on the Saturday following the third Friday of the expiration month.

Position Limits: LEAPS positions are aggregated with other options with the same underlying asset. Limits vary according to the number of outstanding shares and trading volume. Hedge exemptions may be available. Contact exchanges for details.

Trading System: Market Maker/Designated Primary Market Maker/Lead Market Maker/Specialist/Registered Option Trader (depending on the exchange).

Trading Hours: 8:30 a.m. to 3:00 p.m. (Central Time) 9:30 a.m. to 4:00 p.m. (Eastern Time)


  1. www.cboe.com. CBOE Learning Center.
  2. www.optionseducation.org. Options Industry Council "Availability of LEAPS®.
  3. www.optionseducation.org. Options Industry Council "Availability of LEAPS®".
  4. www.optionseducation.org. Options Industry Council "LEAPS® Conversion Tables".
  5. www.optionseducation.org. Options Industry Council "LEAPS® Contract Specifications".