If I just had a little more time, or bought further out, I would have profits instead of losses. This is a typical lament Ive heard from option traders. The limited lifespan of options can be a blessing or a curse depending on what the underlying does during that timeframe. Eliminating the time decay factor, owning the stock is an alternative. However, its expensive compared to options, tying up more capital than you may want at the time.

Whats the alternative between regular options and actually owning the stock?

LEAPS (Long Term Equity Anticipation Securities) were created by the CBOE in 1990 and were first traded on the OEX and SPX indexes. They are now available on around 450 stocks and 10 indexes.

Unlike traditional options, LEAPS have a lifespan of up to three years providing the option trader a long term horizon without the cost of owning the stock directly. Here are a few specific details on LEAPS. The symbols are generally based on the underlying stock symbol but use the letters L,V,W,Z.

It is important to note that due to stock symbol conflicts, there is not always a standard symbol format for LEAPS. For example, Microsoft

PowerRating ) options MSQ, 2010 LEAPS WMF. Even the same stock can have different LEAP symbols depending on what month within the expiration year it expires.

This may sound confusing at first, but the CBOE provides an easy to use symbol directory. LEAPS expire in the standard option cycle by rolling into May, June, or July expiration cycles depending on if the standard option they convert into, in the year of the LEAP, is in the January, February, or March cycle.

LEAPS are the same as regular options in that each LEAP represents 100 shares of the underlying stock. The strike price goes in 2.5 point intervals for strike prices between 5 and 25, 5 point intervals for strike prices between 25 and 200, and 10 point intervals over 200.

They can be exercised American style, which means at any point prior to expiration.

Traders can use LEAPS in multiple ways. They can be used as an outright speculative tool, as a portfolio hedge, and in various combinations of option strategies. They are a great alternative to options and stocks, combining the best features of each into one easy-to-use product.

David Goodboy is Vice President of Marketing for a New York City based multi-strategy fund.