LEAPS, or Long-Term Equity Anticipation Securities, are equity or index options that have a long-term expiration date. LEAPS can have expiration dates as much as two years and eight months into the future whereas ordinary options stock options have an expiration date in under one year. As a result, LEAPS options are much more difficult to price. Not every underlying equity having options traded on it will have LEAPS options, too. The options exchange will only initiate LEAPS option trading if research with market participants including any specialist or market maker indicates sufficient interest exists. A LEAPS option series will only have three strike prices at initiation, the current price and both 20-25% above and below the current price. The LEAPS expiration month is always January. LEAPS that expire in under a year continue to trade as ordinary options. LEAPS are attractive for long-term investmentand portfolio insurance positions.
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