I keep hearing about leap options in trading groups and I am not clear on what they are.
Are they different from regular options? How do they actually function?
I have been trading for a while but usually stick to the basics, so this feels unfamiliar.
LEAP options have expiration dates much longer than regular options, typically 1-2 years.
LEAP options expire in 12+ months vs standard options that expire weekly or monthly.
• Higher premium cost
• Lower time decay impact
• More room for underlying price movement
Typically used for long-term directional bets.
LEAP stands for Long-term Equity Anticipation Securities. They differ from regular options as they have expiration dates of over a year.
I purchased a LEAP for Apple when I was still learning the ropes. I spent $800 on a call option with an 18-month expiration.
The key difference is time. You pay higher premiums, but it allows the stock more room to move favorably.