Index Roll


DEFINITION of 'Index Roll'

A passive index investing strategy that is established by using a combination of index funds and long-term equity anticipation securities (LEAPS). The investor must roll over a series of LEAP options in an attempt to gain exposure to a long-term move in an index. The leverage from the options allows the investor to magnify gains and can result in outperforming an index over the long run.


This type of investing strategy allows an investor to have the same exposure to a standard benchmark, but often with less capital because of the exposure from the LEAP option. Over time, the position will have similar payoff characteristics to a regular indexing strategy, but returns tend to be slightly magnified because of the exposure from the option in the early stages of the setup.

  1. Benchmark

    A standard against which the performance of a security, mutual ...
  2. Leverage

    1. The use of various financial instruments or borrowed capital, ...
  3. Outperform

    An analyst recommendation meaning a stock is expected to do slightly ...
  4. Passive Investing

    An investment strategy involving limited ongoing buying and selling ...
  5. Long-Term Equity Anticipation Securities ...

    Publicly traded options contracts with expiration dates that ...
  6. Index Fund

    An index fund is a type of mutual fund with a portfolio constructed ...
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