Swing trading
How do I execute a LEAPs-backed synthetic stock position for multi-month exposure?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
A LEAPs-backed synthetic stock position uses long-dated call options (Long-Term Equity Anticipation Securities), often combined with selling a put at the same strike, to replicate long stock exposure with significantly less upfront capital.
How it works
Traders typically buy a deep in-the-money LEAPs call expiring a year or more out to approximate share-equivalent exposure while reducing capital outlay compared to owning shares outright.
An example
An investor wanting exposure to a $200 stock might instead buy a LEAPs call with a $150 strike expiring in 18 months for a fraction of the cost of buying 100 shares.
Risk & limitations
LEAPs positions have time decay (theta) and expire worthless if the stock doesn't perform as expected, unlike outright share ownership which has no expiration risk.
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.