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low exercise price option (LEPO)
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A Low Exercise price Option (Lepo) is a call Option with an Exercise price set deep In-the-money. The limiting case, a zero Exercise price Option, is when the Strike Price is zero. It is virtually certain to be exercised and the value and performance of its Intrinsic value is effectively identical to that of the Underlying Equity. These features are designed to allow participation in the performance of an Equity price where there are legal or financial obstacles to purchasing the Underlying directly. If the Lepo is Cash-settled, the buyer profits to the same extent as with a direct holding in the Underlying, but without having to transact in it. However, a Lepo Holder does not earn dividends or have voting rights over the Equity.
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Privatebanking.com
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