Options FAQs

This list represents some of the most frequently asked questions relating to the Chicago Board Options Exchange and options trading in general.

LEAPS® Questions

What are Equity LEAPS?

Equity LEAPS, or Long-term Equity Anticipation Securities are long-dated put and call options on common stock or ADRs. These long-term options provide the holder the right to purchase, in the case of a call, or sell, in the case of a put, a specified number of stock shares at a pre-determined price up to the expiration date of the option, which can be three years in the future.

What determines if LEAPS are available on a particular stock?

LEAPS trade on a select list of optionable stocks. The Chicago Board Options Exchange regularly reviews its options products and periodically lists new Equity LEAPS. An updated CBOE LEAPS list can be obtained by visiting the Symbol Directory located within this site.

When do LEAPS expire? When can LEAPS be exercised?

As with equity options, the expiration date is the Saturday following the third Friday of the expiration month. All equity LEAPS contracts expire in the month of January. Equity options and Equity LEAPS are subject to "American style" exercise. This means the holder has the right to exercise the options on any business day prior to expiration.

How do I know when the next January expiring LEAPS will be listed?

All new January expiring equity LEAPS are initially listed shortly following the expiration in either May, June, or July each year. The month that the LEAP is initially listed in is dependent upon the quarterly cycle of the option. Cycle 1 options January expiring LEAPS are listed after the expiration in May, cycle 2 after the expiration in June, and cycle 3 after the expiration in July.

What can Equity LEAPS do for me?

As with regular equity options, the owner (or holder) of an Equity LEAPS call has the right to purchase, or sell in the case of a put, a pre-determined amount of stock, known as the contract size, at a pre-determined price, called the strike price, for a specified period of time. For Equity LEAPS, the specified period of time, or duration of this option, can be up to 3 years into the future. LEAPS calls can provide an investor with a medium to long-term investment view the opportunity to participate in the upward movement of a stock without making an outright stock purchase. LEAPS puts can provide a medium to long-term insurance or hedge for stock owners in the event of a substantial decline in their stocks.

If an exchange offers LEAPS on an equity option, how would I distinguish between a regular January option and a January LEAP?

Just as a standard option has its' own unique option symbols, equity LEAPS also have unique "root" symbols that allow investors to distinguish between the variety of options currently available on a particular stock. An example would be:

IBM (Standard Option expires January 2005): IBM January 80 Call
IBM (LEAPS Option expires January 2006): LIB January 80 Call
IBM (LEAPS Option expires January 2007): ZIB January 80 Call

LEAPS symbols are listed in the Symbol Directory.

Can I purchase LEAPS directly from the Chicago Board Options Exchange?

No. LEAPS must be purchased like all other option securities, via a broker dealer or online trading network.

What are the trading hours for Equity LEAPS Options?

As with regular equity options, the trading hours for Equity LEAPS are from 8:30 a.m. to 3:00 p.m. Central Time (Chicago time).