Chapter 6. Leaps
Some stocks and indexes have options with expiration dates that occur two to three years into the future. These options are called LEAPS, which is an acronym for Long-term Equity AnticiPation Securities. Most LEAPS expire in January of their designated expiration year. These options include both calls and puts that function in the same manner as options associated with more-current expiration dates. Of course, these long-term options are relatively expensive because of their greatly extended lifetime.
You can use LEAPS in numerous ways. We discuss some of those uses here, while pointing out both the advantages and disadvantages of LEAPS. Because there can be drawbacks to using these long-term options, you should always “Look ...
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