LEAPS

Long-dated options — those with more than roughly a year to expiration, often used as a lower-cost stock substitute.

LEAPS stands for Long-term Equity AnticiPation Securities, which is just a formal name for options that expire far in the future, usually a year or more out rather than in a few weeks. Because they have so much time until expiration, theta decay is slow at first, so you are not fighting the clock the way you do with weekly contracts. Traders often use them to express a longer view on a stock without tying up the full cost of buying the shares outright.

A common use is buying a deep in the money LEAPS call with a high delta as a substitute for owning 100 shares, a setup people call a poor man's covered call when they also sell shorter-dated calls against it. For example, instead of paying 18,000 dollars for 100 shares of a 180 stock, you might buy a call with an 18-month expiry and a 120 strike for a few thousand dollars, capturing most of the upside with less capital.

The main caution is that a LEAPS is still an option, so it will lose value if the stock stalls and time runs out, and you receive no dividends. Long-dated contracts also carry heavy vega, meaning a drop in implied volatility can hurt your position even when the stock barely moves. Cheap out of the money LEAPS look like tempting lottery tickets, but most of them expire worthless.

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Call Put Strike price Premium Expiration In the money (ITM)At the money (ATM)Out of the money (OTM)Intrinsic value Time value (extrinsic)Delta Gamma Theta Vega Implied volatility (IV)Open interest Assignment Exercise Spread Break-even Probability of profit (POP)Assignment risk / early assignment Naked (uncovered) option Rho Historical volatility (HV)Volume Bid-ask spread Moneyness Covered call Cash-secured put Vertical spread Iron condor Straddle Strangle Rolling Margin Max pain American-style option European-style option Contract multiplier Debit vs credit Volatility skew The Greeks Underlying Hedge Leverage Expected move Notional value Protective put Collar Butterfly spread Iron butterfly Calendar spread Diagonal spread Credit spread Debit spread Bull call spread Bear put spread Ratio spread Synthetic position The wheel strategy Poor man’s covered call (PMCC)Box spread Put-call parity Pin risk IV crush IV rank / IV percentile Ex-dividend date Deep in the money Weeklys 0DTE (zero days to expiration)Order types (to open / to close)Buying power reduction Cash settlement Market maker Slippage Mid price Black-Scholes model

Educational use only. Quotes are delayed ~15 minutes and nothing here is financial advice. Options trading involves substantial risk of loss.