Low Exercise Price Option - LEPO

AAA

DEFINITION of 'Low Exercise Price Option - LEPO'

A call option with an exercise price of 1 cent, and an agreement to purchase 1000 shares. They cannot be exercised until expiry, work similar to that of a futures contract, and the premium paid is basically the price to purchase an entire share however, the purchaser only posts a percentage as margin.

INVESTOPEDIA EXPLAINS 'Low Exercise Price Option - LEPO'

Low exercise price options were started in Switzerland and quickly taken up in Finland for one main reasons. That was to avoid paying the required stamp duties that are sometimes charges on stock trading. Since the strike price is so close to zero, the investor purchasing the lepo gains most of the feautres of owning the share directly except dividends and voting rights.

RELATED TERMS
  1. Option

    A financial derivative that represents a contract sold by one ...
  2. Exercise

    To put into effect the right specified in a contract. In options ...
  3. Call Option

    An agreement that gives an investor the right (but not the obligation) ...
  4. Premium

    1. The total cost of an option. 2. The difference between the ...
  5. Futures Contract

    A contractual agreement, generally made on the trading floor ...
  6. Risk

    The chance that an investment's actual return will be different ...
RELATED FAQS
  1. No results found.
Related Articles
  1. Investing Basics

    Pin Down Stock Price With Real Options

    How can you assign a value to what a company may do with its business in the future? We explain how it works.
  2. Options & Futures

    Options Basics Tutorial

    Discover the world of options, from primary concepts to how options work and why you might use them.
  3. Options & Futures

    Dividends, Interest Rates And Their Effect On Stock Options

    Learn how analyzing these variables are crucial to knowing when to exercise early.
  4. Options & Futures

    How Does Your Margin Grow?

    Risk-management tool SPAN margin boosts profitability prospects by helping to determine when to exit a trade.
  5. Options & Futures

    Options On Futures: A World Of Potential Profit

    There's one simple hurdle in the transition from stock to futures options: learning about product specifications.
  6. Insurance

    Futures Fundamentals

    For those who are new to futures but want a solid understanding of them, this tutorial explains what futures contracts are, how they work and why investors use them.
  7. Options & Futures

    20 Investments You Should Know

    To take advantage of all your investing options, you need to know what your choices are. Here we tell you about the diverse features and advantages of 20 different financial instruments.
  8. Options & Futures

    Give Yourself More Options With Real Estate Options

    Real estate options have many benefits, including a smaller initial capital requirement.
  9. Options & Futures

    How to Use Commodity Futures to Hedge

    Both producers and consumers of commodities can use futures to hedge. We explain, using a few examples, how to achieve commodity hedging with futures.
  10. Options & Futures

    The Fancy Way To Diversify Your Portfolio: Precious Metal Options

    A guide with strategies on how to invest or trade in precious metals by using options.

You May Also Like

Hot Definitions
  1. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  2. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  3. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  4. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
  5. Law Of Supply

    A microeconomic law stating that, all other factors being equal, as the price of a good or service increases, the quantity ...
  6. Investment Grade

    A rating that indicates that a municipal or corporate bond has a relatively low risk of default. Bond rating firms, such ...
Trading Center