Options University Blog

These are options having maturity date of more than a yea and traded publicly. To talk about their structure, LEAPS are similar to the short-term options. However, the short term options offer an opportunity of making gains to the long term investors on prolonged price fluctuation and changes. This happens without the need to combine the short term options contract.

Premiums offered on LEAPs are higher as compared to that on any standard options. Extended expiration date provides the underlying security more time in hand for displaying volatility and thus moving up. Investor thus gets more time to make good profit.

A long term investor and trader can have better investment in market with limited exposure through the way of LEAPS. They can witness the long term trends without actually having to go for various short-term contracts. Also, the thought and the ability of purchasing options expiring over a period of year or two is quite catching and provides you long term perspective in the market. You need not invest huge capital and still you can get exposure to long term movements in the price of underlying. Long term options can be bought for individual equities as well as for big stocks.

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