LEAPS hedge is a strategy that involves using long-term equity anticipation securities (LEAPS) to protect against potential losses in a stock position. LEAPS are essentially options contracts with an expiration date that is more than one year away.

One key advantage of using LEAPS hedge is that it allows investors to maintain their exposure to a particular stock for an extended period while minimizing downside risk. By purchasing LEAPS options, investors can protect themselves against potential losses without having to sell their stock position.

One common approach to implementing a LEAPS hedge is to buy a LEAPS put option on a stock that an investor owns. This put option gives the investor the right to sell the stock at a specified price (the strike price) before the expiration date of the option. If the stock price falls below the strike price, the investor can exercise the put option and limit their losses.

Overall, LEAPS hedge is a valuable tool for investors looking to protect their stock positions against downside risk over the long term. By using LEAPS options strategically, investors can manage risk effectively and potentially enhance their overall returns in the market.#26#