Final answer:
Equity Options typically have expirations of up to 12 months, but LEAPS can extend up to 39 months. Their expiration date is integral to options strategies, affecting both risk and potential returns in investments.
Step-by-step explanation:
Equity Options are financial derivatives that give the holder the right, but not the obligation, to buy or sell a stock at a predetermined price within a specified time frame. They are commonly used for hedging, speculation, and income generation.
Typically, equity options are issued with expirations of up to 12 months. However, there are also longer-term options available, such as LEAPS (Long-Term Equity AnticiPation Securities), which can have expirations of up to 39 months from the time of issuance. Standardized option contracts for stocks are usually listed with expiration cycles that the options exchanges determine, providing a range of expiration dates for investors.
When trading equity options, investors should be aware of the expiration date, as it is crucial for options strategies and can affect the investment risk and potential return.