What Are LEAPS Options? Long-Term Options Explained

Reviewed by Leon Moyer - Published October 9, 2026 - Last reviewed October 9, 2026

LEAPS (Long-Term Equity AnticiPation Securities) are exchange-listed options with more than nine months until expiration; equity LEAPS run up to about three years. They are ordinary calls and puts in every other way: each equity contract covers 100 shares, has a strike price and an expiration date, and can be bought or sold on any trading day.

An option is a contract that gives its buyer the right, but not the obligation, to buy (a call) or sell (a put) 100 shares at a set price, the strike price, until the expiration date. The buyer pays a price per share called the premium. If any of that is new, start with What Is an Option? and come back. This lesson covers what changes when the expiration is a year or more away.

Most of this module needs only Courses 1 and 2. Its last lesson, Managing a LEAPS Diagonal, builds on Course 3: read Poor Man's Covered Call - A Diagonal That Stands In for Shares, in the Calendar and Diagonal Spreads module, before it.

What does LEAPS stand for?

LEAPS is short for Long-Term Equity AnticiPation Securities. Traders also say "long-dated options" or "LEAP options." The Options Industry Council (OIC), an options education resource provided by the Options Clearing Corporation (OCC), describes LEAPS as options that expire more than nine months in the future, and its LEAPS overview gives buyers a right "up to three years in the future."

There is no separate LEAPS contract type. A LEAPS call is a call with a lot of time left; a LEAPS put is a put with a lot of time left.

How far out do LEAPS options go?

According to Cboe's equity LEAPS product specifications, equity LEAPS:

• may be listed up to 39 months before expiration;
• use January expirations, expiring on the third Friday of January;
• are American-style, so they can generally be exercised on any business day up to expiration.

Cboe's rulebook (Rule 4.5(f)) also lets the exchange list a few extra long-dated months, up to ten on SPY and six on other classes, so some heavily traded products show June or December LEAPS too. So a chain often shows the next few monthly expirations, then jumps to expirations a year or more away. LEAPS are listed on many large stocks and ETFs, plus some indexes, but not on every optionable stock. If a chain shows nothing beyond nine months, that underlying has no LEAPS listed.

Index LEAPS follow their own product specifications. The Cboe Options rulebook (Rule 4.13(b)), for example, lets the exchange list index LEAPS that expire as far as 180 months from issuance. This module sticks to equity LEAPS.

How much more does a LEAPS cost?

More time means more time value, the part of an option's price above what it would be worth if exercised today. So a LEAPS costs more in total than a short-dated option at the same strike. But it costs much less per day of time bought.

The average per day is a simple division, not the option's actual daily decay. Time decay (theta) is slow while expiration is far away and speeds up in the final weeks. The LEAPS Theta and Vega lesson in this module shows that curve for a one-year call.

You can open the two-year call in the free OptionsPro profit calculator with these inputs loaded, set the premium to Auto, and change the days to see the price move.

How are LEAPS different from regular options?

The contract terms are identical. What changes with distance from expiration is how the price behaves:

• Slower daily decay. A far-off expiration loses value to time slowly at first.
• More sensitivity to implied volatility. A one-point change in implied volatility moves a LEAPS price more dollars than a short-dated option's. This is vega.
• More sensitivity to interest rates. Over a year or more, the interest rate in the pricing model matters enough to notice. This is rho.
• Thinner trading. Many LEAPS trade less than near-term options, so bid-ask spreads can be wider. Check the spread before trading and prefer limit orders.
• Dividends. A call holder does not receive the stock's dividends. Expected dividends over a long life lower a call's price and raise a put's. The prices above assume XYZ pays none.

What happens to a LEAPS as it gets closer to expiration?

A January LEAPS listed more than two years out is the same contract that, once nine months remain, sits on the chain as an ordinary January monthly option. Only its time left, and how margin rules treat it, change.

Can you buy LEAPS on margin?

Usually, in a margin account. Under the strategy-based margin rules Cboe summarizes, a listed equity or equity index option with more than nine months to expiration can be bought with 75% of its cost down, and the same 75% of market value is the maintenance requirement. Once nine months or less remain, the option has no loan value, so it must be fully paid for, and any amount borrowed against it has to be covered. Shorter-dated options must be paid in full in any account. Brokers can set stricter requirements, and they handle a margined LEAPS that crosses nine months in different ways, so ask yours before you rely on margin.

Buying LEAPS on margin adds borrowing costs and the risk of a margin call to a position that can already lose its entire premium. For a buyer, the OIC notes, the risk is limited to the price paid; borrowing to pay that price does not change how much can be lost.