Options mechanics
What is LEAPs (Long-Term Equity Anticipation Securities) and how are they deployed for structural investing?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
LEAPS are long-term equity options with expirations typically extending one to nearly three years out, sharing the same contract mechanics as standard options but with much longer durations.
How it works
Investors use LEAPS calls as a lower-capital stock substitute or LEAPS puts as extended portfolio protection, benefiting from slower relative theta decay compared to near-term contracts.
An example
Buying an XYZ LEAPS call expiring in 18 months allows long-term bullish exposure to the stock for a fraction of the capital required to buy 100 shares outright.
Risk & limitations
LEAPS still carry extrinsic value that erodes over time, and lower liquidity in far-dated strikes can widen bid-ask spreads compared to standard monthly contracts.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.