Options Glossary: L


A measure of leverage. The expected percentage change in the value of an option for a 1% change in the value of the underlying product.

Last trading day

The last business day before the option's expiration date during which purchases and sales of options can be made. For equity options, this is generally the third Friday of the expiration month. If the third Friday of the month is an exchange holiday, the last trading day is the Thursday immediately preceding the third Friday.

LEAPSĀ® (Long-term Equity AnticiPation Securities) / Long-dated options

Calls and puts with an expiration of over nine months when listed. Currently, equity LEAPS have two series at any time with a January expiration.


A term describing one side of a position with two or more sides. When a trader legs into a spread, they establish one side first, hoping for a favorable price movement in order to execute the other side at a better price. This is a higher-risk method of establishing a spread position.


A term describing the greater percentage of profit or loss potential when a given amount of money controls a security with a much larger face value. For example, a call option enables the owner to assume the upside potential of 100 shares of stock by investing a much smaller amount than that required to buy the stock. If the stock increases by 10%, for example, the option might double in value. Conversely, a 10% stock price decline might result in the total loss of the purchase price of the option.

Limit order

A trading order placed with a broker to buy or sell stock or options at a specific price.

Liquidity / Liquid market

Trading environments characterized by high trading volume, a narrow spread between the bid and ask prices, and the ability to trade larger sized orders without significant price changes.

Listed option

A put or call traded on a national options exchange. In contrast, over-the-counter options usually have non-standard or negotiated terms.

Long option position

The position of an option purchaser (owner) which represents the right to either buy stock (in the case of a call) or to sell stock (in the case of a put) at a specified price (strike price) at or before some date in the future (the expiration date). This position results from an opening purchase transaction (long call or long put).

Long stock position

A position in which an investor has purchased and owns stock.

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