In financial terms, what are LEAPS?
In basic English, LAEPS are an option contract with a much longer expiration date than a typical option. LEAPS is an acronym for Long Term Equity Anticipation Security.
LEAPS were first introduced in the 1990s as a way to bet on long term gains in a share price. Typical options contracts have expiry cycles of 3, 6 and 9 months. LEAPS typically extend for 2 years out.
LEAPS are not available on all stocks and indexes. They are reserved for stocks or indices that have an average daily trading volume over 1000 contracts. Similar to standard options, they are available in two forms. Calls and Puts.
Equity LEAPS typically expire in January of a given year.
In the modern trading context, LEAPS are frequently recommended in online forums. Some retail investors are looking for quick tendies or gains. Others manage risk by investing in a longer term timeframe. If an investor believes that a stock will go to the moon eventually they will recommend purchasing LEAPS.
”This stock is going to the moon. Holding for now, but loaded on LEAPS.”
“LEAPS are cheap AF right now!”
“What the F are LEAPS?”