Long-Term Equity Anticipation Securities, or LEAPS, are becoming increasingly popular among U.S. investors looking for a way to participate in stock market growth with less capital outlay.
LEAPS are long-term options contracts that typically expire one to three years into the future, allowing investors to control shares of top companies at a fraction of the price of outright ownership.
Such a setup offers significant upside potential while limiting downside risk to the premium paid for the option.
In this article, we will explore what LEAPS are, how they work, and the 15 best stocks for LEAPS in 2025.
TL;DR: 15 Best Stocks for Leaps (Exclusive List)
Here’s a quick snapshot of the 15 best stocks for LEAPS in 2025:
- Nvidia (Nasdaq: NVDA) – AI chip leader
- Advanced Micro Devices (Nasdaq: AMD) – Fast-growing chipmaker
- Palantir Technologies (NYSE: PLTR) – Big data analytics
- Alphabet Inc. (Nasdaq: GOOG) – AI and cloud powerhouse
- CrowdStrike (Nasdaq: CRWD) – Cybersecurity innovator
- Tesla, Inc. (Nasdaq: TSLA) – EV and energy disruptor
- Amazon.com, Inc. (Nasdaq: AMZN) – Cloud and e-commerce giant
- Microsoft Corporation (Nasdaq: MSFT) – Cloud and enterprise leader
- Apple Inc. (Nasdaq: AAPL) – Ecosystem and services king
- Visa Inc. (NYSE: V) – Payments network
- PayPal Holdings, Inc. (Nasdaq: PYPL) – Digital payments
- Johnson & Johnson (NYSE: JNJ) – Healthcare stability
- Procter & Gamble (NYSE: PG) – Consumer goods giant
- Coca-Cola (NYSE: KO) – Global beverage leader
- UnitedHealth Group (NYSE: UNH) – Healthcare services
What Are LEAPS?
EAPS are a type of options contract with expiration dates that are farther out than standard options, often ranging from one to three years from the purchase date.
These instruments are particularly appealing for investors who anticipate substantial price movements in a stock over a longer time horizon but wish to avoid the larger capital outlay required to purchase the stock outright.
They can be calls or puts, and they give investors more time for long-term themes to unfold compared to short-term options.
Benefits of LEAPS
- Leverage: LEAPS allow investors to control a large number of shares with a relatively small investment, magnifying potential returns.
- Longer Time Horizon: LEAPS extend up to two or three years, providing more time for long-term investment theses, such as AI growth or healthcare demand, to develop without rushing decisions.
- Limited Risk: The maximum loss is limited to the premium paid for the LEAPS, unlike owning the stock directly, where losses can be substantial.
- Reduced Time Decay: LEAPS experience slower time decay compared to short-term options, providing more time for the stock to move favorably.
- Flexibility in Strategies: LEAPS can serve as tools for speculation, hedging, or replacing stock ownership. This adaptability means they can fit into both aggressive and conservative portfolio strategies.
Risks of LEAPS
- High Premium Costs: LEAPS often require a large upfront premium, especially for popular growth stocks. This higher cost can reduce returns and lock up more capital than expected.
- Volatility Sensitivity: Because LEAPS have long expirations, their prices are highly sensitive to changes in implied volatility, which can cause unpredictable price swings unrelated to the underlying stock performance.
- Risk of Expiration Worthless: Despite the long time horizon, LEAPS can expire worthless if the stock price fails to move favorably, leaving investors with no recovery of their premium.
- Liquidity Concerns: Not all LEAPS contracts have high trading volume. Wider bid-ask spreads can increase costs and make entering or exiting positions more challenging for investors.
- Opportunity Cost: Capital allocated to LEAPS may miss out on other investment opportunities, particularly if the chosen stock underperforms for an extended period.
Best Stocks for LEAPS in AI, Tech, and Hyper-Growth
Here are our top picks for the best stocks for LEAPS in AI, Tech, and Hyper-Growth sectors, based on current market trends, growth potential, and overall sentiment.
Nvidia (Nasdaq: NVDA)
Overview
Nvidia has emerged as the most important company in artificial intelligence hardware. Its graphics processors are critical not only for gaming but also for data centers and training advanced AI models.
Over the past decade, it transformed from a gaming chip specialist into a diversified powerhouse at the heart of technological progress.
Its chips now support cloud computing, healthcare research, and autonomous driving.
Investors who want to participate in long-term growth themes often see Nvidia as an essential anchor in their portfolios because of its deep technological moat and consistent execution.
Growth Catalysts
The largest driver of growth is the explosion in AI applications. Big technology companies and startups alike depend on Nvidia’s GPUs to train and deploy advanced machine learning systems.
Beyond AI, cloud computing expansion ensures continued demand for high-performance chips.
Nvidia’s partnerships in the automotive sector give it entry into self-driving technology and smart mobility.
Its software ecosystem, particularly CUDA, keeps customers within its platform, making it harder for competitors to break through.
The company also invests in robotics, digital twins, and edge computing, which create new markets that can extend growth well into the next decade.
Risks
Despite leadership, risks remain. Competition is fierce, with AMD and custom silicon from major cloud providers challenging its position.
Regulatory scrutiny, including export controls on chips to certain markets, could dampen growth.
Cyclicality in gaming revenue means periods of softness are possible.
Additionally, valuations tend to be elevated, leaving less room for error in execution.
These factors require careful consideration when entering long-term option positions, as swings in sentiment can affect premiums.
Conclusion
Nvidia’s dominance in AI chips and its diversified growth channels make it one of the most attractive candidates for LEAPS.
The company’s entrenched ecosystem offers staying power, but investors should expect volatility along the way.
For those comfortable with ups and downs, it offers exposure to one of the most important technological shifts of this generation.
Advanced Micro Devices (Nasdaq: AMD)
Overview
Advanced Micro Devices has grown into one of the most influential semiconductor companies in the world.
Once seen as an underdog to Intel, it now consistently delivers chips that rival or even surpass the performance of its competitors.
Its reach extends across personal computers, gaming consoles, and most importantly, high-performance data centers.
Leadership under CEO Lisa Su has been pivotal in guiding the company toward sustainable innovation.
Today, it stands as a legitimate player in both CPUs and GPUs, competing on equal footing with larger rivals while winning market share across key industries.
Growth Catalysts
A major driver of future performance is the adoption of its EPYC processors in servers, which are being embraced by major cloud providers.
Its graphics unit is also expanding, as demand for AI-optimized GPUs creates a vast growth market.
New partnerships with hyperscale data center operators highlight how central its chips are becoming to modern infrastructure.
Beyond enterprise computing, the gaming market remains resilient, with AMD powering both Sony’s PlayStation and Microsoft’s Xbox consoles.
Continued progress in AI-focused hardware ensures the company is positioned for the next wave of technology spending.
Risks
While the growth story is compelling, the company must consistently deliver leading-edge products to maintain momentum.
Competition from Intel in CPUs remains strong, and Nvidia continues to dominate in GPUs for AI. Profit margins could come under pressure if pricing battles intensify.
Semiconductor supply chains are complex and often exposed to geopolitical risks, which could affect production or distribution.
Valuation has at times run ahead of fundamentals, meaning setbacks could result in sharp pullbacks.
Conclusion
AMD has transformed into a company that can no longer be dismissed as a secondary player.
For investors considering LEAPS, its expanding role in servers, AI, and gaming creates a multi-faceted growth story.
The risk of competition is real, but its track record of execution makes it one of the more attractive options for long-term exposure to the semiconductor sector.
Palantir Technologies (NYSE: PLTR)
Overview
Palantir has evolved from a secretive government contractor into a recognized leader in enterprise data analytics.
Its platforms, Foundry and Apollo, are now being used not only by defense and intelligence agencies but also by private enterprises across sectors such as healthcare, manufacturing, and finance.
The company’s unique ability to integrate disparate data sources and provide actionable insights positions it at the forefront of the growing field of applied artificial intelligence.
With management emphasizing profitability in recent years, Palantir has moved from being a speculative growth story to one with a clearer long-term trajectory.
Growth Catalysts
One of the key drivers of Palantir’s future is the expansion of its Artificial Intelligence Platform (AIP), which has been adopted by a growing number of corporations looking to operationalize AI.
Its long-standing government contracts remain stable revenue anchors, providing both credibility and consistency.
Commercial revenue has become a more meaningful share of its business, and ongoing wins with large multinational corporations show that its reach is broadening.
Partnerships with global enterprises and increased focus on scalable solutions make it more competitive.
As industries race to harness AI-driven insights, Palantir’s software is positioned to become a backbone for digital transformation initiatives worldwide.
Risks
Despite the upside, the company faces several challenges. Valuation has historically been a sticking point, with its stock often pricing in aggressive growth expectations.
Heavy reliance on government contracts exposes it to shifts in political priorities and budgetary cycles.
Competition is intensifying, with established players such as Microsoft, Google, and Amazon offering analytics tools bundled within their cloud ecosystems.
Profitability improvements are encouraging, but they remain fragile, meaning execution risk persists.
Conclusion
Palantir is a polarizing stock, but also one of the most unique stories in the market. Its mix of government stability and commercial expansion provides a compelling narrative for long-term growth.
For LEAPS investors, it represents a higher-risk, higher-reward play on the adoption of AI across both public and private sectors.
Those with patience and tolerance for volatility could find significant potential upside in holding long-dated positions.
Alphabet Inc. (Nasdaq: GOOG)
Overview
Alphabet, the parent company of Google, has grown far beyond its roots in search and advertising.
Its ecosystem now spans Android, YouTube, Chrome, Maps, and cloud services, making it one of the most diversified technology companies in the world.
Over the past decade, the company has also become a leader in artificial intelligence, with its research arms pushing boundaries in machine learning and generative AI.
This combination of strong core businesses and new frontiers gives the company multiple long-term drivers that can support growth well into the next decade.
Growth Catalysts
The biggest engine of profitability remains digital advertising, where Google’s search and YouTube maintain commanding market share.
As businesses continue shifting marketing budgets online, this revenue stream should remain resilient.
Another key driver is Google Cloud, which has been gaining traction against Amazon AWS and Microsoft Azure, fueled by investments in AI-driven solutions for enterprise customers.
The Gemini AI platform highlights Alphabet’s ambition to lead in generative AI. YouTube’s integration of shopping and streaming services expands monetization opportunities.
Finally, the company invests in “Other Bets” such as Waymo for autonomous driving and Verily for life sciences, which could eventually yield transformational upside.
Risks
Despite its strengths, Alphabet faces notable risks. Regulatory scrutiny remains intense, with antitrust cases in the U.S. and abroad challenging its dominance in search and advertising.
Competition in cloud services is fierce, and rivals like Microsoft are aggressively integrating AI into their offerings.
Rising costs to develop and deploy large AI models also pressure margins.
Moreover, the advertising business is tied to broader economic cycles, making it vulnerable to slowdowns in spending.
Conclusion
Alphabet’s combination of dominant core businesses, rapid progress in AI, and a growing cloud division makes it a compelling stock for LEAPS investors.
While regulatory hurdles and fierce competition will remain ongoing challenges, its strong balance sheet and history of innovation provide confidence that it can adapt and continue compounding over the long term.
For those seeking exposure to both stability and innovation, Alphabet stands out as a solid candidate for long-dated options.
CrowdStrike (Nasdaq: CRWD)
Overview
CrowdStrike has become a dominant force in the cybersecurity sector by pioneering cloud-native solutions.
Its Falcon platform leverages artificial intelligence to detect, prevent, and respond to cyber threats in real time.
The company’s growth has been fueled by the increasing frequency and sophistication of cyberattacks, as well as the shift to remote work and cloud adoption.
Its subscription-based model provides recurring revenue, which has contributed to strong financial momentum and customer loyalty.
By building an ecosystem that integrates threat intelligence, endpoint protection, and managed services, CrowdStrike has differentiated itself as a leader in modern security architecture.
Growth Catalysts
Demand for cybersecurity is expanding rapidly as enterprises migrate critical infrastructure to the cloud and as ransomware attacks become more damaging.
CrowdStrike’s Falcon platform, built with scalability in mind, has consistently posted high net retention rates, showing customers continue to expand usage over time.
Partnerships with global enterprises and governments expand its addressable market.
The company’s push into identity protection and cloud security adds layers of growth beyond endpoint defense.
Rising adoption of zero-trust frameworks across industries positions CrowdStrike at the center of long-term security spending.
As companies prioritize security budgets regardless of the economic cycle, its growth runway remains compelling.
Risks
Competition in cybersecurity is intense, with Microsoft, Palo Alto Networks, and other established vendors offering overlapping solutions.
CrowdStrike must continue innovating to defend its market share.
Valuation has historically been high, which exposes the stock to sharp swings if revenue growth slows.
Cybersecurity companies also face reputational risk, and any high-profile breach could damage credibility.
Finally, as subscription costs rise, customers may evaluate alternatives, creating potential churn pressure.
Conclusion
CrowdStrike is more than just a niche security vendor; it has positioned itself as an essential partner for enterprises navigating an increasingly hostile cyber landscape.
Its strong retention rates and broadening portfolio make it a worthy consideration for LEAPS.
While competitive pressures are real, the secular growth of cybersecurity spending provides a tailwind that should sustain long-term momentum.
Tesla, Inc. (Nasdaq: TSLA)
Overview
Tesla has grown from a niche electric car maker into one of the most influential companies in the global automotive industry.
Beyond its dominance in electric vehicles, it has expanded into energy storage, solar, and autonomous driving technologies.
Its brand carries enormous recognition, and its production facilities span multiple continents, giving it both scale and reach.
For investors, Tesla represents not just a car manufacturer but a broader play on the transition to sustainable energy and advanced mobility.
Growth Catalysts
One of the biggest tailwinds is the accelerating global shift toward electric vehicles, supported by government incentives and consumer adoption.
Tesla’s Gigafactories continue to ramp up production capacity, which helps lower costs and expand margins.
Its focus on software, including Full Self-Driving (FSD) capabilities, has the potential to transform vehicles into recurring revenue platforms.
The company is also advancing its energy business, with Powerwall and Megapack systems increasingly important in grid storage solutions.
International expansion, particularly in Asia and Europe, ensures further volume growth.
With innovation in batteries and AI-driven autonomy, Tesla remains at the cutting edge of the EV revolution.
Risks
The company faces intense competition as legacy automakers and new entrants accelerate their EV strategies.
Scaling production profitably while maintaining quality is an ongoing challenge. Regulatory hurdles, particularly around autonomous driving, could delay or limit the rollout of FSD.
Economic cycles can impact consumer demand for higher-priced vehicles, and currency fluctuations add uncertainty in international markets.
Finally, the stock is often volatile, which can create large swings in option values for LEAPS investors.
Conclusion
Tesla’s unique combination of automotive leadership, energy innovation, and software potential makes it a compelling but volatile choice for long-dated options.
Its disruptive edge provides significant upside potential, but execution and regulatory hurdles cannot be overlooked.
For investors willing to embrace volatility, Tesla can be an exciting LEAPS candidate tied to the future of transportation and sustainable energy.
Amazon.com, Inc. (Nasdaq: AMZN)
Overview
Amazon has evolved into one of the world’s most influential companies, balancing its roots in e-commerce with its leadership in cloud computing.
While online retail remains a massive part of its business, the true engine of profitability lies in Amazon Web Services (AWS), which provides cloud infrastructure for startups, enterprises, and governments worldwide.
Beyond these core businesses, Amazon is steadily building momentum in digital advertising, logistics, and streaming media, collectively diversifying its revenue and strengthening its ecosystem.
For investors, it represents both a defensive and growth-oriented story, offering exposure to multiple long-term trends.
Growth Catalysts
The most significant driver is AWS, which remains one of the largest and most profitable cloud platforms.
As companies continue migrating workloads to the cloud, AWS benefits from recurring, high-margin revenue.
Another catalyst is Amazon’s advertising division, which has quietly become a multibillion-dollar business by monetizing traffic on its retail platform.
E-commerce continues to grow, bolstered by Prime membership and the company’s unmatched logistics network, which creates a wide moat.
Healthcare is also emerging as a growth area through Amazon Pharmacy and its push into telehealth.
Meanwhile, the entertainment segment, including Prime Video and Twitch, expands customer engagement and opens new monetization opportunities.
Risks
Despite its strengths, Amazon faces several challenges.
Retail margins remain thin, leaving that segment vulnerable to inflation and rising labor costs. AWS, while dominant, competes with Microsoft Azure and Google Cloud, both of which are investing aggressively.
Regulatory scrutiny is an ever-present risk, particularly around antitrust concerns in e-commerce and cloud.
Heavy capital expenditures to maintain logistics efficiency also weigh on free cash flow.
Lastly, investor expectations are often high, meaning any slowdown in revenue growth could trigger sharp market reactions.
Conclusion
Amazon’s combination of dominant cloud infrastructure, growing advertising revenue, and unmatched retail presence makes it one of the best stocks for LEAPS.
Its ability to operate across multiple growth verticals offers resilience and upside potential.
While regulatory and competitive risks must be monitored, its long track record of reinvestment and adaptability suggests it can remain a compounder for years to come.
For LEAPS investors, Amazon offers exposure to some of the strongest secular trends in technology and commerce.
PayPal Holdings, Inc. (Nasdaq: PYPL)
Overview
PayPal has become one of the most recognizable names in digital payments.
With a global network of consumers and merchants, it provides services that extend well beyond traditional money transfers.
Its ecosystem includes PayPal, Venmo, Braintree, and Xoom, and more, enabling it to serve both individuals and businesses.
The company sits at the intersection of e-commerce, mobile payments, and fintech innovation, which makes it a unique player in the financial services industry.
Its brand reputation and established user base give it a durable advantage as digital payments continue to gain share worldwide.
Growth Catalysts
E-commerce growth remains a major driver of PayPal’s success.
Every online transaction that flows through its platform contributes to revenue, and the company has benefited from the secular shift away from cash.
Venmo, popular among younger consumers, has grown into a cultural staple in the U.S. and continues to expand into areas like debit cards and cryptocurrency transactions.
Merchant solutions through Braintree give PayPal exposure to some of the largest digital commerce companies.
As consumers embrace digital wallets and contactless payments, PayPal is positioned to capture more volume.
Its expansion into international markets also offers long-term growth opportunities, especially in regions where digital adoption is accelerating.
Risks
Competition is fierce in the payments space, with Apple Pay, Google Pay, Block’s Cash App, and traditional card networks all vying for market share.
Regulatory scrutiny around fees and financial compliance adds another layer of uncertainty. Profit margins face pressure from increasing transaction costs and heavy investment in innovation.
While Venmo has high brand recognition, monetization remains a challenge compared to PayPal’s core business.
Finally, shifts in consumer spending or slower e-commerce growth could weigh on transaction volumes.
Conclusion
PayPal’s strong market presence, multiple platforms, and role in global digital commerce make it an attractive candidate for LEAPS.
While competitive and regulatory challenges are real, its established position in digital payments provides durability.
For long-term investors seeking exposure to the rise of cashless transactions, PayPal represents a balanced mix of growth and innovation that aligns well with a LEAPS strategy.
Top Stocks for LEAPS in Steady Dividend and Compounder Tech
Microsoft Corporation (Nasdaq: MSFT)
Overview
Microsoft is a cornerstone of the modern technology landscape, balancing a legacy in software with forward-looking investments in cloud and artificial intelligence.
Its Windows and Office products remain widely used worldwide, but the real growth driver has been Azure, its cloud computing platform.
The company has successfully integrated AI into its product suite, from Office 365 to GitHub Copilot, positioning itself as both an enterprise essential and a leader in the AI revolution.
With recurring revenue streams and one of the strongest balance sheets in the world, it offers durability alongside growth.
Growth Catalysts
Azure continues to expand as businesses migrate workloads to the cloud, with Microsoft often winning deals because of its deep relationships with enterprises.
Integration of AI into productivity tools creates new avenues for monetization, while Teams has become a fixture of remote and hybrid work environments.
The company’s gaming division, bolstered by Xbox and acquisitions in the gaming space, provides diversification.
LinkedIn continues to grow as a professional network with significant advertising potential.
With strong free cash flow, Microsoft can reinvest in research while also rewarding shareholders through buybacks and dividends.
Its ability to bundle services across cloud, software, and security makes it indispensable to corporate clients.
Risks
Competition is fierce in cloud computing, where AWS and Google Cloud are major rivals.
Regulatory scrutiny is also an ongoing challenge, with governments questioning its market power and acquisitions.
Economic slowdowns could impact enterprise IT budgets, potentially affecting Azure’s growth trajectory.
While Microsoft has proven resilient in downturns, premium valuation levels leave it vulnerable to market corrections if growth slows.
Conclusion
Microsoft combines stability with forward-looking innovation, making it one of the most reliable LEAPS candidates.
Its diversified revenue base, strong balance sheet, and leadership in AI-enhanced enterprise solutions give investors confidence in long-term growth.
While risks exist from regulation and competition, its entrenched role in global business makes it a stock with both defensive qualities and significant upside potential.
Apple Inc. (Nasdaq: AAPL)
Overview
Apple remains one of the most influential companies in the world, with an ecosystem that binds hardware, software, and services together in a way few rivals can match.
Its flagship iPhone remains a cornerstone of revenue, but the company has successfully expanded into wearables, Macs, iPads, and, most importantly, services.
Offerings such as Apple Music, iCloud, and Apple TV+ provide recurring income and create stickiness in its ecosystem. With an installed base of over a billion active devices, the company commands unparalleled customer loyalty and brand recognition.
Growth Catalysts
Services continue to be the fastest-growing part of the business, driving higher margins and recurring revenue that smooth out cyclical hardware sales.
The wearables segment, including the Apple Watch and AirPods, deepens consumer attachment to the ecosystem.
Expansion into augmented reality and mixed reality with the Vision Pro headset positions Apple to participate in a new wave of computing.
The company’s focus on health and wellness features in its devices further strengthens user engagement.
Finally, its ability to integrate AI into consumer products and optimize performance across its custom silicon chips provides a long-term competitive edge.
Risks
Heavy dependence on the iPhone for revenue remains a key vulnerability, particularly as smartphone markets mature.
Regulatory pressures, especially around the App Store’s commission structure and antitrust concerns, could impact profitability.
Supply chain complexities, with significant reliance on Asia, leave the company exposed to geopolitical and logistical risks.
Competitive threats from Android device makers and shifts in consumer spending during economic downturns also pose risks.
Additionally, as a premium brand, demand could weaken if global economic conditions tighten.
Conclusion
Apple’s blend of hardware dominance, services-driven recurring revenue, and innovation in new product categories makes it a strong candidate for LEAPS.
While regulatory scrutiny and dependence on the iPhone are challenges, its unmatched ecosystem and customer loyalty ensure staying power.
For long-term investors, Apple offers both stability and upside potential, making it a cornerstone pick in a LEAPS strategy.
Visa Inc. (NYSE: V)
Overview
Visa is the world’s largest payment network, processing trillions of dollars annually across credit, debit, and prepaid cards.
Its business model is built on transaction volumes, earning revenue every time a customer swipes, taps, or pays online with a Visa card.
Unlike banks, Visa does not bear direct credit risk, making it less exposed to loan defaults. Its network scale, brand recognition, and partnerships with financial institutions worldwide provide durable advantages.
In a world rapidly shifting from cash to digital payments, Visa sits at the center of the transition.
Growth Catalysts
The ongoing secular trend toward cashless transactions is a primary growth engine. As emerging markets adopt electronic payments, Visa benefits from higher penetration rates and rising transaction volumes.
Cross-border payments also provide a lucrative revenue stream, with travel recovery adding momentum.
The company has steadily expanded into new areas such as contactless payments, e-commerce, and digital wallets.
Partnerships with fintech firms and collaborations in areas like buy-now-pay-later enhance its ecosystem.
Additionally, Visa is exploring opportunities in cryptocurrency settlement and blockchain-based solutions, ensuring relevance in the evolving digital finance landscape.
Risks
Regulatory scrutiny is a persistent challenge, with governments closely monitoring fees charged to merchants.
Competitive pressure from fintech disruptors such as Block, PayPal, and Apple Pay could erode Visa’s dominance over time if consumers shift to alternative payment rails.
Economic downturns may reduce transaction volumes, particularly in discretionary spending and cross-border travel.
While Visa has historically managed through cycles well, its reliance on consumer activity creates some sensitivity to broader macroeconomic conditions.
Conclusion
Visa combines global scale with reliable profitability, making it one of the most durable LEAPS candidates in the financial sector.
Its entrenched role in digital payments offers steady growth potential, while its ability to innovate ensures it adapts to new market realities.
For long-term investors, Visa provides stability and exposure to one of the most important shifts in modern commerce.
Best Stocks for LEAPS in Defensive Dividend & Healthcare Stability
Johnson & Johnson (NYSE: JNJ)
Overview
Johnson & Johnson is one of the most diversified healthcare companies in the world, with three major segments: pharmaceuticals, medical devices, and consumer health.
Its scale and balance across multiple divisions make it a defensive powerhouse in healthcare.
The company’s long track record of delivering steady results, coupled with its strong brand recognition and commitment to innovation, underpins its reputation as a blue-chip stock.
J&J has consistently generated cash flow that supports not only research and acquisitions but also its long-standing dividend, which appeals to conservative investors.
Growth Catalysts
The pharmaceutical division remains a strong driver, with therapies in oncology, immunology, and neuroscience supporting growth.
Its MedTech segment, which covers surgical tools, orthopedics, and vision care, benefits from rising global healthcare demand.
Innovation is at the forefront, with new treatments in late-stage trials that can add billions in revenue over time.
The company’s spinoff of its consumer health division, Kenvue, allows J&J to sharpen its focus on higher-margin segments while still benefiting from brand strength in products like Band-Aid and Tylenol.
Aging demographics and increased healthcare spending worldwide provide a favorable backdrop for long-term expansion.
Risks
Litigation risk has been a recurring issue, with lawsuits related to talc-based products drawing attention and potential financial liabilities.
Pricing pressures from governments and insurers could affect margins, particularly in the U.S. healthcare market.
Global regulatory environments also create uncertainty, and patent expirations in the pharmaceutical segment pose competitive challenges.
Additionally, as healthcare policies evolve, reimbursement rates and access to markets may change, creating long-term headwinds.
Conclusion
Johnson & Johnson offers a combination of stability, innovation, and income, making it a prime LEAPS candidate for defensive-minded investors.
Its diversified model reduces reliance on any single product or market, while its consistent dividend track record offers peace of mind.
Though litigation and pricing risks exist, its scale and adaptability position it well to remain a cornerstone in healthcare investing for years to come.
Procter & Gamble (NYSE: PG)
Overview
Procter & Gamble is one of the world’s largest consumer goods companies, with a portfolio of household brands spanning cleaning, personal care, grooming, and baby products.
Well-known names like Tide, Gillette, Pampers, and Crest have global recognition and deep customer loyalty.
Its products enjoy consistent demand regardless of economic conditions, making the company a reliable defensive stock.
P&G’s business model is built on scale, marketing strength, and a constant pipeline of product innovation, which together keep its market position strong.
Growth Catalysts
Innovation remains central to P&G’s growth strategy, with ongoing investment in research to improve product performance and sustainability.
The company has also streamlined its brand portfolio to focus on its most profitable categories, improving margins.
Expansion in emerging markets offers long-term growth opportunities as rising incomes boost demand for premium consumer goods.
Digital transformation, including e-commerce partnerships and direct-to-consumer channels, has strengthened its ability to reach customers.
Sustainability initiatives, such as reducing plastic use and improving supply chain efficiency, also enhance its appeal to environmentally conscious consumers, helping future-proof its brands.
Risks
Procter & Gamble faces risks from rising input costs, including commodities, packaging, and transportation.
Currency fluctuations can impact profitability since it earns a significant portion of revenue outside the U.S. Competition from private labels and other global giants like Unilever is a constant challenge.
While its brand equity is strong, consumer shifts toward more affordable alternatives during economic downturns could weigh on results.
Regulatory changes related to consumer safety and environmental policies may also increase costs.
Conclusion
Procter & Gamble’s unmatched brand portfolio, consistent demand, and focus on innovation make it a cornerstone defensive pick for LEAPS investors.
While cost pressures and competition require ongoing vigilance, its scale and ability to adapt give it staying power.
For investors seeking stable long-term exposure with steady income potential, P&G offers resilience and reliability.
Coca-Cola (NYSE: KO)
Overview
The Coca-Cola Company is synonymous with beverages, yet the business reaches far beyond a single flagship soda.
It manages a deep portfolio that includes sparkling soft drinks, hydration brands, teas, coffees, juices, and energy drinks, supported by one of the most extensive distribution systems on earth.
The asset-light, concentrate-focused model, in partnership with an independent bottling network, helps the company scale quickly while keeping capital intensity in check.
Decades of brand building and global availability create powerful customer loyalty that tends to hold up through economic cycles, which is why many investors view it as a classic defensive compounder.
Growth Catalysts
A steady shift toward low and no-sugar offerings has broadened the audience for core brands, with Coca‑Cola Zero Sugar and smaller package sizes supporting premium price points without sacrificing volume.
Beyond colas, the push into still beverages, including water, sports drinks, coffee, and tea, diversifies revenue and reduces reliance on any single category.
Revenue growth management, which blends data-driven pricing and package architecture, gives local teams the flexibility to adjust to changing consumer habits.
Emerging markets remain a long runway, as rising incomes and improved cold-drink infrastructure expand per capita consumption.
Partnerships with quick-service restaurants, investment in coolers and fountain equipment, and digital marketing that ties products to local culture all reinforce brand relevance at the point of sale.
Risks
Health-conscious trends and sugar-related regulations can weigh on demand for traditional soft drinks.
Because a large portion of revenue is generated outside the United States, currency swings can affect reported results.
Water availability, packaging costs, and sustainability expectations create operational and reputational risks that require ongoing investment.
Competition from global and regional beverage companies remains intense, and consumer preferences can shift toward functional or ready-to-drink options where the company is still building share.
While the franchise system adds resilience, it can also make rapid portfolio shifts more complex to execute.
Conclusion
Durable brands, a flexible concentrate model, and unmatched distribution make this a resilient business that can navigate changing consumer tastes.
For long-dated options, it often works best as a steadier anchor in a LEAPS basket, where deep in the money calls can mimic equity exposure with less capital.
The tradeoff is lower potential torque compared with high-growth tech, yet the reliability of cash flows and pricing power can help smooth portfolio volatility over time.
UnitedHealth Group (NYSE: UNH)
Overview
UnitedHealth combines the largest private health benefits business in the United States with a scaled services platform under the Optum umbrella.
The benefits segment covers commercial, Medicare, and Medicaid populations, while Optum brings together a pharmacy benefit manager, analytics and technology services, and a fast-growing care delivery network.
This integrated model, which spans insurance, data, and front-line care, gives the company unusual visibility into medical trends and costs.
The breadth of operations, coupled with consistent execution, has made it a reference point for stability in a complex, regulated industry.
Growth Catalysts
Aging demographics support multiyear demand for Medicare Advantage plans, where care coordination and supplemental benefits can differentiate offerings.
OptumCare continues to expand physician groups and ambulatory services, reinforcing the transition toward value-based care that rewards improved outcomes and lower costs.
OptumRx provides scale in pharmacy benefit management, and when combined with analytics from OptumInsight, can help clients manage total medical spend more effectively.
The shift of services from hospital inpatient settings to outpatient and home environments increases convenience for patients and can lower overall costs, which aligns with payer and employer goals.
Together, these engines create a diversified growth profile that does not rely on any single lever.
Risks
Public policy remains the largest variable. Rate setting for Medicare Advantage, changes to risk adjustment methodologies, or broader reimbursement reforms can alter economics year to year.
Medical cost trends are another source of volatility, as unexpected spikes in utilization can pressure margins.
Large, integrated players face ongoing regulatory and antitrust scrutiny when pursuing acquisitions or expanding provider footprints.
Technology and data concentration increase cybersecurity exposure that must be managed carefully.
Finally, integrating new practices and aligning incentives across diverse clinical groups is operationally complex and can take time to realize expected efficiencies.
Conclusion
Scale, integration, and data capabilities set this company apart in managed care. The combination of benefits, pharmacy, analytics, and care delivery provides multiple ways to create value, even as the policy backdrop shifts.
For LEAPS investors seeking a defensive counterweight to higher beta holdings, deep in the money calls on a business like this can provide steady participation in healthcare demand with clearer downside parameters.
While policy risk will never disappear, a diversified model and disciplined execution offer durable support for a long-term thesis.
How to Pick the Best Stocks for LEAPS
Choosing the right stocks for LEAPS is as much about understanding the business behind the ticker as it is about evaluating the option contract itself.
Investors need to look for companies with durable competitive advantages, healthy balance sheets, and clear growth runways.
Since LEAPS involve a long-term commitment, the best underlying stocks are those that can weather cycles and keep creating value for years.
Business Fundamentals Matter
Companies with strong financial foundations and recurring revenue streams tend to make better LEAPS candidates.
Stable free cash flow, brand strength, and leadership in their industries improve the odds that the stock will support option value over the long haul.
Market Leadership and Growth Themes
Focus on stocks tied to long-term themes like artificial intelligence, healthcare, digital payments, and consumer staples. Market leaders in these sectors often enjoy steady demand and innovation pipelines that support multi-year growth.
Liquidity in Options Markets
Deep and liquid options markets are essential. High open interest and narrow bid-ask spreads make it easier to enter and exit LEAPS positions without sacrificing returns. Illiquid contracts, by contrast, can erode profitability.
Contract Selection and Delta
When evaluating LEAPS contracts, prioritize deep in-the-money calls with deltas around 0.80 or higher.
These behave more like the underlying stock, giving steadier exposure while still benefiting from leverage.
Expirations 18 to 30 months out provide the balance between time horizon and pricing.
Risk Management and Patience
Even the best stocks face volatility, so patience and risk management are vital. Investors should be comfortable holding through swings, knowing that LEAPS offer time for growth themes to unfold.
Position sizing, diversification, and setting clear exit strategies help make the approach sustainable.
Are Stocks for LEAPS a Good Investment?
LEAPS are a good investment for investors with high-conviction, long-term outlooks.
They are not ideal for those seeking quick profits, but can work well for people who believe in multi-year growth stories.
Compared to buying stocks, LEAPS require less upfront capital. Compared to short-term options, they allow more time for an investment thesis to materialize.
Here’s a detailed analysis of why stocks for LEAPS can be advantageous, with key considerations and benefits.
Leveraged Exposure to Price Movements
One of the primary advantages of LEAPS is their ability to offer leveraged exposure to a stock’s price movement. By purchasing LEAPS call options, investors can control a larger number of shares with a smaller investment compared to buying the underlying stock outright.
This leverage can potentially lead to significant gains if the stock price rises substantially over the option period. For example, if a blue-chip stock like Apple or Microsoft experiences a notable price increase, the corresponding LEAPS call options could yield substantial returns.
Risk and Reward Dynamics
However, it’s important to understand the risk-reward dynamics of LEAPS. If the underlying stock does not reach the strike price by the expiration date, the options may expire worthless, resulting in a total loss of the investment.
Therefore, careful selection of the underlying stock and thorough market analysis are crucial. Investors should look for companies with solid fundamentals, positive growth prospects, and strong market positions.
Blue-chip stocks and well-established mid-cap stocks often fit these criteria well, offering a balance of stability and growth potential.
Strategic Uses of LEAPS
LEAPS can be used in various strategic ways beyond simple speculation. Here are some key uses:
Hedging Long-Term Positions
LEAPS can serve as an effective hedge against long-term stock positions. For instance, if an investor holds a substantial amount of stock in a particular company, purchasing LEAPS put options can provide downside protection.
If the stock price falls significantly, the gains from the put options can offset the losses in the stock position, thus managing risk effectively.
Portfolio Diversification
LEAPS can also contribute to portfolio diversification. By incorporating options on different companies or sectors, investors can diversify their exposure and reduce overall portfolio risk. This approach is particularly useful when stock market conditions are uncertain and the outlook for specific sectors or companies is mixed.
Generating Income
Writing LEAPS covered calls is another strategy to generate income. In this approach, an investor who owns the underlying stock sells LEAPS call options against their stock holdings. The premiums received from selling the calls provide immediate income.
If the stock price remains below the strike price, the investor retains both the stock and the premium. If the stock price rises past the strike price, the investor may need to sell the stock at the strike price, potentially missing out on further gains.
Suitability for Different Investors
LEAPS are suitable for various types of investors, including hedge funds and individual investors. Hedge funds often use LEAPS to gain leveraged exposure to stock movements or to hedge other positions in their portfolios.
Individual investors can use LEAPS to pursue growth opportunities with a smaller capital outlay or to hedge against potential downturns in their long-term investments.
Final Thoughts
LEAPS open the door for investors to participate in long-term stock market growth without committing as much upfront capital as buying shares outright.
While they carry unique risks, they can also amplify returns when used carefully.
That’s why it is essential to conduct thorough research and consider the risks involved, especially the possibility of options expiring worthless.
The 14 best stocks highlighted here span technology, payments, consumer goods, and healthcare, offering a mix of growth and stability.
For those willing to take the long view, LEAPS can be a powerful addition to a diversified investment strategy.
Stocks for Leaps FAQs
How Do You Pick a Stock for LEAPS?
Selecting a stock for LEAPS involves evaluating several factors, including the stock’s fundamentals, implied volatility, and liquidity. Focus on companies with strong financial health, consistent revenue growth, and a solid market position. High trading volume is essential as it ensures easier entry and exit from the position.
Additionally, consider the stock’s implied volatility; higher volatility can mean greater potential price movement, which is beneficial for trading options.
What Is the Best Delta for LEAPS?
A delta of 0.70 or 0.80 is often considered ideal for LEAPS. This delta indicates that the option will move approximately 70-80% of the stock price change, offering a good balance between risk and reward. A higher delta suggests a higher likelihood that the option will expire in-the-money, making it a preferred choice for long-term investors.
What Are LEAPS Options?
LEAPS (Long-Term Equity Anticipation Securities) are options contracts with expiration dates extending up to three years. These options provide investors with a way to gain leveraged exposure to a stock’s price movement over an extended period. They are useful for strategies requiring more time to develop, allowing investors to benefit from long-term trends.
How Do LEAPS Options Differ From Traditional Options?
Traditional options typically have expiration periods ranging from a few weeks to several months. LEAPS options, however, have expiration dates usually one to three years in the future. This longer time frame allows investors more time for their investment thesis to play out and to capitalize on long-term trends.
What Is the Difference Between LEAPS Call Options and LEAPS Put Options?
- LEAPS Call Option: This option gives the investor the right, but not the obligation, to buy a stock at a specified strike price before the option expires. It is typically used when the investor expects the stock price to rise over the long term.
- LEAPS Put Option: This option gives the investor the right, but not the obligation, to sell a stock at a specified strike price before the option expires. It is often used when the investor anticipates a potential decline in the stock price over the long term.
How Can LEAPS Options Be Used in an Options Strategy?
LEAPS options can be integrated into various strategies:
- Long-Term Position: Investors can use LEAPS call options to establish a long-term bullish position on a stock, gaining leveraged exposure without committing the full capital required to purchase the stock outright.
- Hedging: LEAPS put options can serve as a hedge against potential declines in a stock portfolio, providing downside protection over an extended period.
- Covered Calls: Investors holding a long-term stock position can sell LEAPS call options against their shares to generate additional income through premiums.
- Bull Call Spreads: This involves buying LEAPS call options at a lower strike price while simultaneously selling call options at a higher strike price, aiming to profit from the difference in premiums.
Can LEAPS Be Used for Short Selling?
Yes, LEAPS put options can be used as an alternative to shorting. By purchasing a LEAPS put option, an investor can benefit from a decline in the stock price without the unlimited risk associated with traditional short selling. This strategy limits the potential loss to the premium paid for the put option while allowing for significant upside if the stock declines.
Do LEAPS Options Pay Dividends?
No, LEAPS options do not pay dividends. Dividends are paid to shareholders who own the underlying stock. However, the potential impact of dividends on the stock price is often reflected in the option’s premium. Investors holding LEAPS options should be aware of upcoming dividend payments as they can influence the stock’s price movement.
How Do LEAPS Options Fit Into a Long-Term Investment Strategy?
LEAPS options can complement a long-term investment strategy by providing leverage and flexibility. They allow investors to gain exposure to significant price movements with a smaller capital outlay compared to buying the stock outright.
LEAPS can also be used to hedge long-term positions, generate additional income through covered calls, and capitalize on long-term market trends. Their extended expiration timelines make them a versatile tool for long-term investors seeking to enhance their portfolio performance.
How Long Do LEAPS Typically Last?
LEAPS usually expire between one and three years from the purchase date. This extended timeframe gives investors more room for long-term themes, like AI or healthcare demand, to play out.
Are LEAPS Riskier Than Buying Stocks?
LEAPS can carry higher risk since the entire premium is at stake if the option expires worthless. However, they also limit maximum losses to the premium paid, unlike margin-based stock purchases.
Can LEAPS Be Used for Income Strategies?
Yes, investors often pair LEAPS calls with short-term covered calls in a strategy known as a diagonal spread. This approach generates income while keeping long-term upside potential intact.
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