LEAPS
Long-term Equity AnticiPation Securities — exchange-listed options with expirations of roughly one to three years. Mechanically identical to standard options, just longer-lived.
LEAPS make time a smaller enemy: theta per day is modest, and a deep in-the-money LEAPS call behaves like stock bought with built-in, non-recourse leverage. That is the basis of stock-replacement strategies.
The costs are equally structural: wide markets, meaningful vega and rho, and the ease of overpaying for years of extrinsic value. Long time horizons forgive timing errors, not valuation errors.
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