SIE practice questionmediumOptions — LEAPS
LEAPS (Long-Term Equity Anticipation Securities) differ from standard options primarily because:
- AThey can only be traded by institutional investors
- BThey do not have strike prices
- CThey have expiration dates up to 3 years in the future✓ Correct answer
- DThey are not cleared through the OCC
Explanation
Why C — They have expiration dates up to 3 years in the future
LEAPS are long-term options with expiration dates up to approximately 3 years out (vs. standard options with expirations typically up to 9 months). They function exactly like standard options — same clearing through the OCC, same strike prices, same rights/obligations. They are available to all investors, not just institutions. LEAPS tend to have higher premiums due to the extra time value.
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