long leg
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Long leg
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
Long Leg
In an option spread, the portion that is a long position. For example, if a spread consists of a long position on one option and a short position on a similar option, the long position is called the long leg. It should not be confused with a leg in a swap.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
long leg
The side of an option spread (that is, one option bought long and one option sold short) that an investor is long. With a spread that involves owning a June 20 put and being short a March 20 put, the June 20 put represents the long leg. Compare short leg.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.