Long-term Equity Anticipation Securities (LEAPS)
Long-term Equity Anticipation Securities (LEAPS)
Long-term equity anticipation securities (LEAPS) are option contracts that have a much longer expiry period than standard options. The expiry period typically ranges from 1-3 years. They are derivatives that track the price of an underlying asset like stocks or indexes. The Chicago Board Options Exchange (CBOE) was the first to introduce LEAPS in 1990. The buyer in a LEAPS contract has the right but not the obligation to purchase or sell the underlying asset at a predetermined rate on or before its expiration date. (more…)