How to Buy Leap Options

Want to boost your investment potential while keeping risks under control? LEAP options might be exactly what you need. I've used them to lock in big-picture trades with less capital, and they’ve become a core part of my strategy. This guide breaks down everything—from what LEAPS are to exactly how to buy LEAP options and use them for long-term trading success.

What Are LEAP Options?

LEAPS (Long-Term Equity Anticipation Securities) are just like standard call or put options, except they come with expiration dates that are more than one year away—usually up to two or even three years into the future.

They’re available on select stocks and ETFs and can be a powerful tool if you want to:

• Make leveraged long-term bets

• Hedge against downturns

• Replace long stock positions with lower capital requirements

Learn more from the Chicago Board Options Exchange (CBOE) guide to LEAPS

Why Trade LEAP Options?

✅ Long Time Frame

Unlike short-term options that expire in weeks or months, LEAPS give your ideas room to breathe.

✅ Limited Downside, Unlimited Upside (Calls)

The maximum loss is the premium you pay—no matter how far the stock drops.

✅ Lower Capital Requirement

Instead of spending $10,000 to buy 100 shares of a $100 stock, you might spend $1,000–$2,500 on a LEAP call and still benefit if the stock rises.

How to Buy LEAP Options: Step-by-Step

Here's the actual process of buying LEAP options, with platform-agnostic advice (this works on TD Ameritrade, E*TRADE, Robinhood, etc.).

1. Choose the Right Stock or ETF

Start with a stock or ETF that you believe will make a strong move over the next 1–3 years. Look for:

• A clear bullish or bearish thesis

• Healthy trading volume and options liquidity

• Volatility catalysts (new products, growth trends, economic shifts)

Example:
Let’s say you believe Nvidia (NVDA) will continue dominating the AI space. A LEAP call option could be a smart play.

2. Open Your Brokerage Platform

Log in to your options-enabled trading account. Search for the stock and go to the “Options Chain.” Most brokers let you filter by expiration date—look for dates at least 12 months out.

3. Select the Expiration Date

Choose a LEAPS contract with an expiration 12 to 36 months away.
If it's early 2025, you might choose:

• January 2026

• January 2027

The further out you go, the more time you give your thesis to play out—but the higher the premium you'll pay.

4. Pick a Strike Price

Strike price selection is key. You generally have three choices:

Tip: For beginners, deep ITM calls are a safer bet as they behave more like the stock itself.

5. Place the Trade

• Choose “Buy to Open” → “Call” (or “Put” if you’re bearish)

• Set your limit order to avoid paying the market ask

• Submit the trade

Congrats—you’ve just bought a LEAP option!

Example: Buying a LEAP Call on Apple

Let’s say AAPL is trading at $180, and you’re bullish long-term.

• Expiration: Jan 2027

• Strike: $150 call (deep ITM)

• Premium: $35.00 (=$3,500 for 1 contract)

This gives you the right to buy 100 shares at $150 any time before Jan 2027.

Breakeven at expiration = $150 + $35 = $185
If AAPL is trading at $230 by then, you’re up $4,500 on a $3,500 investment.

How to Manage LEAP Options

💡 Hold vs. Sell vs. Exercise

• Hold: Let your thesis play out. Watch time decay (theta) and volatility.

• Sell Before Expiration: If the value rises, you can close the trade for profit—no need to exercise.

• Exercise: If ITM and you want to own the stock, you can buy 100 shares at the strike.

Most traders sell to close their LEAPS to avoid tying up capital in buying shares.

💡 When to Cut Losses

LEAPS give time—but not immunity from losses. Cut the position if:

• Your thesis changes

• The underlying stock loses key support

• Volatility drops dramatically, crushing option value

Tips for Success with LEAPS

• ✅ Use limit orders to get better fills (LEAPS often have wide bid/ask spreads)

• ✅ Look for high open interest contracts to improve liquidity

• ✅ Track implied volatility—rising IV increases your LEAP’s value

• ✅ Consider pairing with a covered call or protective put for hedging

LEAPS for Hedging

Buying LEAP puts can act as long-term insurance on your portfolio. For example:

• Own a tech-heavy portfolio? Buy LEAP puts on QQQ or XLK to protect against downturns.

Fidelity also offers a solid breakdown of LEAP options for long-term investors

LEAPS vs. Buying Stock

Final Thoughts: Should You Buy LEAP Options?

LEAP options offer one of the best ways to trade long-term stock trends with less capital and limited risk. Whether you’re bullish on tech, healthcare, energy, or the entire market, LEAPS give you the flexibility to ride big trends without tying up your entire account.

Just remember—know your thesis, manage your risk, and always trade with a plan.

Learn More from Options Trading in 21 Days

Want to keep leveling up? Check out these articles from the Options Trading in 21 Days series:

• What Is a Call Option? Beginner-Friendly Explanation

• How to Use the Greeks in Options Trading