What Are LEAPS Options? Long-Dated Calls and Puts
LEAPS, short for Long-term Equity AnticiPation Securities, are exchange-listed calls and puts that expire much further out than ordinary options. Cboe lists equity LEAPS with January expirations up to 39 months from first listing, each contract covering 100 shares, exercisable on any business day before expiry.
A LEAPS contract is not a different kind of option. It is the same call or put with a much longer time to expiry, and that one change alters what the premium is made of, how fast it decays and how the position behaves when the stock moves. This page works through one hypothetical call from purchase to expiry.
How it works
A LEAPS call gives the right to buy 100 shares at the strike price; a LEAPS put gives the right to sell them. Cboe’s specification page describes equity LEAPS as “long-dated options on common stock or ADRs,” with a multiplier of 100 shares per contract. They trade on the same exchanges and clear through the same system as any call option or put option.
They are American-style. The Options Industry Council, the education arm of the clearing house OCC, says equity LEAPS “may be exercised and settled in stock prior to expiration.” Many holders sell the contract before expiry instead of exercising it, as with short-dated options.
The premium has two parts. Intrinsic value is what the option would be worth if exercised now: for a call, the stock price minus the strike, if positive. Everything above that is time value, the price of the chance that the stock moves further before expiry.
How LEAPS are listed
Equity LEAPS expire in January only. Cboe’s page states “January expiration only. May be up to 39 months from the date of initial listing.” The OIC’s own summary puts the reach at up to two years and eight months for the contracts listed at any one time.
New years arrive in September. The OIC’s expiration-cycle page says all of the 2029 LEAPS were introduced on Monday, 14 Sep 2026, and all of the 2030 LEAPS will be introduced on Monday, 13 Sep 2027. As time passes, a LEAPS series simply becomes the nearest January contract and trades like any other.
They can be bought partly on credit. Cboe’s margin line for purchases says that for puts or calls “with more than 9 months until expiration, deposit / maintain 75% of the total cost.” With 9 months or less left, the full premium must be paid, as with ordinary options.
Strikes are spaced by price. Cboe lists intervals of 2.5 points for strikes from $5 to $25, 5 points from $25 to $200 and 10 points above $200.
Time value over a long clock
A long-dated option carries more time value in dollars, but pays it off more slowly each day. The theta page shows that decay is not a straight line: it is gentlest far from expiry and steepest in the final months.
That is the main reason people choose LEAPS. A holder can be early on an idea by a year and still have time left, where a three-month option would already have expired. The cost is a larger premium paid up front.
A deep in-the-money LEAPS call behaves a lot like the shares. When most of the premium is intrinsic value, the contract moves close to dollar for dollar with the stock over its range, while tying up less money. Its delta, the change in option price per $1 move in the stock, sits nearer to 1 than for a call near the money.
It is still an option. It pays no dividends, it carries no vote, and at expiry anything the stock has not earned above the strike is gone.
A worked example
Take a hypothetical stock at $100 and a LEAPS call with an $80 strike, expiring in January 2029, priced at $26.00. One contract costs $26.00 times 100, which is $2,600. Buying 100 shares instead would cost $10,000.
Split the premium. Intrinsic value is $100 minus $80, which is $20. Time value is $26 minus $20, which is $6. So $2,000 of the $2,600 is value the option already has, and $600 is what the buyer pays for the time.
The break-even at expiry is the strike plus the premium: $80 plus $26, which is $106. The stock has to rise 6% by January 2029 just for the call to return its cost.
Now compare outcomes at expiry, ignoring dividends, commissions and interest:
- Stock at $80: the shares lose $2,000, or 20%. The call is worth nothing, a loss of $2,600, or 100%.
- Stock unchanged at $100: the shares are flat. The call is worth $20, a loss of $600, or 23.1%, the time value.
- Stock at $120: the shares show a gain of $2,000, or 20%. The call is worth $40, a gain of $1,400, or 53.8%.
- Stock at $140: the shares show a gain of $4,000, or 40%. The call is worth $60, a gain of $3,400, or 130.8%.
On margin, Cboe’s 75% rule means depositing at least $1,950 of the $2,600, with $650 financed. That adds interest and a maintenance requirement to a position that can already go to zero.
The original data
In the 24,971-video search study this site keeps, 14 titles are about LEAPS options, from 10 channels, at a median of 20,841.5 views. Two more titles use the word for an unrelated trading competition and are left out.
7 of those 14 titles put a dollar figure, a win rate or retirement in the title. The most-watched LEAPS video in the set, at 338,005 views, is one of them. The pitch in the titles is income and outcomes; the mechanics in the worked example above, the $6 of time value and the $106 break-even, appear in none of the titles.
One title in the 14 leads with risk, promising the hidden risks of LEAPS, at 11,463 views. That is about half the median for the group.
The listing and margin figures on this page come from Cboe and the OIC, read on 25 Sep 2026: January expiry only, up to 39 months from listing, 100 shares a contract, 75% of cost as the minimum deposit when bought on credit with more than 9 months left, and 14 Sep 2026 as the listing date of the 2029 series.
When it fails
It fails when the stock does not move enough. In the worked example the stock can rise 5.9%, from $100 to $105.90, and the call still loses money at expiry. Shares bought at the same time would be showing a gain.
It fails faster than shares on the way down. A 20% fall cost the shareholder 20% and the call buyer 100%. The leverage that turned a 20% rise into 53.8% works exactly as hard in reverse.
It fails when volatility falls. Much of a long option’s time value is priced from implied volatility. If the market’s expectation of movement drops, the premium can shrink even when the stock has not moved. The OIC’s pricing page says changes in implied volatility “can also significantly alter” LEAPS premiums, and that interest rates matter more for longer-dated options.
It fails when it is held to the final months. The decay the long clock was bought to avoid returns once the January expiry comes close, and the steepest part of the theta curve arrives last.
It fails when bought on margin without a plan for the loan. Financing a quarter of a premium that can fall to zero adds a debt to a position with no floor above zero.
And it fails when a title’s income figure is taken as a typical result. Half of the LEAPS titles in the corpus lead with money or a win rate, and none of those figures is a measure of what an ordinary buyer receives.
Related
The options page explains what makes every option, long-dated or not, different from owning shares. Call options sets out the right a LEAPS call gives in plain terms. And theta shows how the time value in the worked example drains away as January approaches.
Price the time value before anything else. Subtract the intrinsic value from the premium and ask whether the stock is likely to move by at least that much before January of the expiry year, because that is the amount the position has to earn back first.
— Michael Whitman
This page is educational, not financial advice. Test every idea on your own charts before risking money.