Ask the Institute

DATE: October 24, 2001

What is a LEAP®? Does it affect the price of the stock? Does it set the price of options?

Sometimes thought of as separate products, LEAPS (Long-term Equity Anticipation Securities also known as long-dated options) are simply, calls and puts with an expiration as long as thirty-nine months. Currently, equity LEAPS have two series at any time with a January expiration. For example, in August 2001, LEAPS are available with expirations of January 2003 and January 2004.