Low Exercise Price Option
In 1995 the Australian Stock Exchange started listing of new exchange traded option product called a Low Exercise Price Option (LEPO). A LEPO is a European style call option with a low exercise price of $0.01 and a contract size of 1000 shares to be delivered on exercise.
LEPOs are traded on margin. The premium is close to the whole share price, and a trader only posts margin, not the full price. Both the buyer and the seller are margined, all positions are marked-to-market daily. LEPOs work like a futures contract.
Read more about Low Exercise Price Option: Differences From Standard Options, Pricing of Low Exercise Price Options
Famous quotes containing the words exercise, price and/or option:
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“Our passional nature not only lawfully may, but must, decide an option between propositions, whenever it is a genuine option that cannot by its nature be decided on intellectual grounds; for to say, under such circumstances, “Do not decide, but leave the question open,” is itself a passional decision—just like deciding yes or no—and is attended with the same risk of losing the truth.”
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