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In finance, LEAPS (an acronym for Long Term Equity AnticiPation Security) are options of longer term until expiry than other, more common, options. LEAPS are available on approximately 2500 equities and 20 indexes. As with traditional short term options, LEAPS are available in two forms, calls and puts.
Options were originally created with expiry cycles of 3, 6, and 9 months, with no option term lasting more than a year. Options of this form, for such terms, still constitute the vast majority of options activity. LEAPS were created relatively recently and typically extend for terms of 2 years out. Equity LEAPS always expire in January. For example, if today were November 2005, one could buy a Microsoft January call option that would expire in 2006, 2007, or 2008. The latter two are LEAPS.
When LEAPS were first introduced in 1990, they were derivative instruments solely for stocks; however, more recently, equivalent instruments for indices have become available. These are also referred to as LEAPS.
LEAPS are often used as a risk reduction tool by investors. For example, in an article in Stocks, Futures and Options (SFO) magazine, Dan Haugh of PTI Securities & Futures suggests that stock investors can manage risk and price protection by considering purchase of an exchange-traded fund and “..buying put protection on that ETF with LEAPS." 
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