LEAPS Return Calculator
LEAPS (Long-term Equity AnticiPation Securities) are long-dated options with expirations of more than one year. They offer leveraged exposure to a stock's long-term price movement at a fraction of the share price. This calculator measures the return on a LEAPS position by comparing the exit premium (what you sell the option for or its current value) to the entry premium (what you paid), and expressing the return as a percentage. It also annualizes the return based on the holding period in days, which is useful for comparing LEAPS returns to stock and other investment returns on an equal time-weighted basis. Enter the entry price, exit price, and holding period in days.
LEAPS return formula
Total Return = (exit premium - entry premium) / entry premium
Annualized Return = (1 + total return)^(365/days) - 1
Profit per contract = (exit - entry) * 100
Total Profit = profit per contract * number of contracts
Each standard equity option contract represents 100 shares. LEAPS contracts follow the same multiplier. Multiply per-share premium differences by 100 to get the dollar P&L per contract.
LEAPS versus stock comparison
- A LEAPS call with a 0.70 delta captures approximately 70% of the stock's upside move at roughly 25-30% of the stock's price, providing substantial capital efficiency.
- If the stock does not rise above the strike by expiration, the LEAPS call loses all value, unlike a stock which retains its market value.
- LEAPS can be rolled before expiration by selling the expiring option and buying a new one further out in time.
- Tax treatment: LEAPS held more than 12 months may qualify for long-term capital gains treatment on exercise or sale (consult a tax adviser).
- LEAPS are available on most major US stocks and many ETFs with high liquidity.
Frequently asked questions
What are LEAPS options?
LEAPS (Long-term Equity AnticiPation Securities) are options with expirations longer than one year, typically 1 to 3 years. They allow investors to gain long-term bullish or bearish exposure to a stock with defined, limited risk compared to holding shares.
How is LEAPS return calculated?
Return = (exit premium - entry premium) / entry premium. If you bought a LEAPS call for $5.00 and later sold it for $12.00, your return is ($12 - $5) / $5 = 140%. The annualized return factors in the holding period.
What is the advantage of using LEAPS over buying stock?
LEAPS provide significant leverage at a fraction of the stock cost. A LEAPS call might cost 15-30% of the stock price while capturing much of the upside. However, LEAPS can expire worthless if the stock does not move favorably, meaning you can lose 100% of the premium paid.
What is a LEAPS replacement strategy?
LEAPS replacement (or stock replacement) involves buying a deep in-the-money LEAPS call instead of 100 shares. The call with delta near 0.80-0.90 mimics much of the stock's price movement at significantly lower cost, freeing capital for other uses.
How does time decay affect LEAPS?
LEAPS have lower daily theta (time decay) than short-dated options because they have more time premium spread over a longer period. As expiration approaches within a year, theta accelerates. The daily time decay of a 2-year option is roughly one-quarter that of a 6-month option.
Official sources
- Options Clearing Corporation: theocc.com.
- CBOE LEAPS information: cboe.com/products/options/leaps.
- SEC Investor Education: sec.gov/investor.
Reviewed by the CalculatorHub team, edited by James Graham, 15 June 2026. See our methodology.