Zero Strike Price Options

Options with an exercise price of zero, or very close to zero, traded on options exchanges in countries where there is a transfer tax, ownership restriction, or other obstacle to the transfer of securities, especially stock. Zero strike price options are frequently cash settled so that no transaction in the underlying occurs. The holder of the option has full participation in the underlying price, as if he held a long position in the stock, and the seller has full offsetting participation in the stock price, as if he had taken a short or short-against-the- box position. See also Low Exercise Price Options (LEPOs).

Glossary * Z