Long Leg

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DEFINITION of 'Long Leg'

The part of an option spread strategy that involves buying an option on the underlying asset. A basic option spread strategy involves the purchase and simultaneous sale of an option (a put or call) on an asset such as a stock. Since the purchase of a put or call in such a spread amounts to "going long" on the option, it is called the long leg of the spread. Similarly, as the sale of a put or call in such a spread amounts to "going short" on the option, it is called the short leg of the spread.

INVESTOPEDIA EXPLAINS 'Long Leg'

For example, consider a bull call spread on a stock trading at $25. This spread would involve buying a call option at a strike price of say $26, and the simultaneous sale of a call option at a higher strike price, say $27. Both options would have the same expiration date. In this case, the $26 call constitutes the long leg of the spread, while the $27 call makes up the short leg.



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