What Do LEAPS Actually Cost?

The price of a LEAPS contract depends on the stock price, strike selection, time to expiration, and implied volatility. Here are real-world cost ranges for deep in-the-money LEAPS calls (delta ~0.80) with 18-month expirations on popular stocks:

| Stock | Stock Price | LEAPS Strike | Approximate Cost | Capital Required | AAPL$210$170~$48$4,800 MSFT$440$370~$85$8,500 AMZN$200$160~$50$5,000 GOOGL$180$145~$42$4,200 NVDA$135$105~$38$3,800 META$520$430~$110$11,000 SPY$540$460~$95$9,500 | TSLA | $260 | $200 | ~$78 | $7,800 |

These are approximations that shift with market conditions and IV levels, but they give you a realistic picture.

Breaking Down the Cost

Every LEAPS price has two components:

Intrinsic value: The amount the option is in-the-money. An AAPL $170 call when AAPL is at $210 has $40 of intrinsic value.

Extrinsic (time) value: The premium above intrinsic value. If the LEAPS costs $48, the time value is $8. This $8 is the true cost of using LEAPS instead of stock.

Focus on the time value when evaluating cost. The intrinsic value is just your equity in the position—you can recover it by selling. The time value is what you pay for the privilege of leverage and time.

Minimum Account Size for LEAPS

A single LEAPS contract on a moderately priced stock costs $3,000-$8,000. But you should never put your entire account into one position.

Recommended minimums:

  • Single LEAPS position: Account of at least $15,000-$20,000 (so the LEAPS is 25-35% of your account)
  • Two LEAPS positions: Account of at least $30,000-$40,000
  • LEAPS-based portfolio (3-5 positions): Account of at least $50,000+

    • If your account is under $10,000, individual stock LEAPS may be too concentrated. Consider SPY or QQQ LEAPS, or look at lower-priced stocks where LEAPS cost $2,000-$3,000.

    Making LEAPS More Affordable

    Choose lower-priced stocks. Not everything has to be a $400 stock. Stocks in the $50-100 range have LEAPS contracts in the $1,500-$3,000 range.

    Use ETFs. IWM (Russell 2000) LEAPS are cheaper than SPY LEAPS. XLF, XLK, and other sector ETFs offer LEAPS in the $1,500-$4,000 range.

    Accept lower delta. A 0.65 delta LEAPS costs less than a 0.85 delta on the same stock. You give up some stock-tracking accuracy for a lower entry price.

    Sell short calls against it (PMCC). The premium you collect from selling monthly calls reduces your net cost basis over time.

    Hidden Costs to Factor In

    Bid-ask spread: LEAPS on less liquid stocks can have spreads of $1.00-$3.00. On a $40 LEAPS, that is a 2.5-7.5% entry cost.

    Rolling costs: You will likely roll the LEAPS forward before expiration. Budget $500-$1,500 per roll depending on the stock and time frame.

    Opportunity cost of dividends: Calculate the dividends you would have received as a shareholder and treat that as an additional cost of the LEAPS position.

    Annual Cost of Maintaining a LEAPS Position

    A useful framework is to calculate the annualized cost of holding a LEAPS position:

    Annual cost = (Time value paid + Rolling costs + Missed dividends - Interest on freed capital) / Years held

    For a typical deep ITM LEAPS on a $200 stock:

  • Time value: $800
  • Annual roll cost: $600
  • Missed dividends: $250/year
  • Interest earned on freed capital: -$600/year

    • Net annual cost: approximately $1,050, or about 5% of the notional stock position. Compare that to margin interest rates of 8-13% and the LEAPS approach is often cheaper.

    OptionsPilot helps you track the total cost of your LEAPS positions, including premiums paid, roll costs, and income received from short calls, so you always know your true cost basis.