Options trading
LEAPS
Definition
Long-Term Equity AnticiPation Securities: listed options with more than a year to expiration. Cboe lists equity LEAPS with January expirations up to about three years out.
Example
Say a $100 stock has a LEAPS call with a $90 strike and two years to expiration priced at $22.00, or $2,200 per contract, versus $10,000 for 100 shares. If the stock is still at $100 at expiration, the call is worth $10, a $1,200 loss; if it ends below $90, the whole $2,200 is lost.
Hypothetical numbers, for illustration only.
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