LEAPS Calculator
Compare LEAPS to buying shares before you commit.
A LEAPS calculator helps you model breakeven, leverage, and outcome scenarios across different strike prices and expiration dates before spending premium on a long-dated call option.
Model a LEAPS Trade in the AppHow LEAPS Work
LEAPS (Long-term Equity Anticipation Securities) are call options with expirations typically 1 to 3 years out. You pay a premium for the right to buy 100 shares at the strike price at any time before expiration.
The key advantage: you get meaningful exposure to the stock's upside while committing far less capital than buying shares outright. The key risk: if the stock stays flat or rises slowly, time decay erodes your premium and you may lose the entire investment.
Stock rises to target
LEAPS gain in value. You can sell the option for profit or exercise and take ownership of the shares.
Stock stays flat
Time decay slowly erodes the premium value. A stock that stays flat for two years is a losing LEAPS trade even if the thesis eventually plays out.
Stock falls
The option loses value. At expiration, if the stock is below the strike, the option expires worthless and you lose the full premium paid.
Key Metrics to Calculate Before Buying LEAPS
Breakeven Stock Price
The stock price at expiration at which your LEAPS neither gains nor loses money. Below this price, the option is worth less than the premium paid.
Premium Paid
Capital Efficiency
How much exposure you get per dollar invested vs. buying shares. A $10 premium for 100 shares of a $100 stock means you control $10,000 of stock for $1,000 (10:1 leverage).
Premium Cost
Return vs. Buying Shares
At your target price, compare the LEAPS return percentage to the stock return percentage. The difference illustrates the leverage effect (and the amplified loss if you are wrong).
Premium Paid
Maximum Loss
Defined and limited to the premium paid. You cannot lose more than the cost of the option. This is the primary advantage over buying stocks on margin.
Example: LEAPS on XYZ
Example for illustrative purposes only. LEAPS involve significant risk and are only appropriate for high-conviction, undervalued situations.
Make Sure the Thesis Justifies the Premium
Wall St Yardie calculates fair value and business quality scores so you can confirm the upside gap is large enough to justify the cost of a LEAPS position.
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