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Definition of 'Spring Loading'
An option-granting practice in which options are granted at a time that precedes a positive news event. Spring loading relies on the fact that positive news typically causes the underlying company's stock to surge in value. Timing an option grant to precede the public news release provides the option holder with an almost instant profit.
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Investopedia explains 'Spring Loading'
Spring-loading options is often a controversial practice. Because option strike prices tend to be derived from the grant day's stock price, on the day of granting the option should be "at the money".
Theoretically, executives should benefit from options-based compensation only if their performance has increased shareholder value. Therefore, critics of spring loaded options state that allowing the option holder to gain instant profit defeats the purpose of option-based compensation. However, others claim that the effects of spring loading are minimal, as most option grants have a vesting period, which prevents the holder from realizing his or her position for a period of time. In this case, the option might be out of the money long before the investor can exercise it.
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Search results for 'Spring Loading'
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http://stocks.investopedia.com/stock-analysis/2010/Fertilizer-Industry-Sees-Bright-Spring-CF-TRA-BG-VALE-AGU0217.aspx
... Article; Comments (0). Fertilizer Industry Sees Bright Spring.
Posted: Feb 17, 2010 09:05 AM by Sham Gad. ...
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http://stocks.investopedia.com/stock-analysis/2011/Is-Hologic-A-Coiled-Spring-HOLX-GE-SI-ABT-BDX-GPRO-BCR-QGEN-BDX-LNCR-SYK1109.aspx
... Article; Comments (0). Is Hologic A Coiled Spring? Posted: Nov
11, 2011 17:19 PM by Stephen D. Simpson, CFA. ...
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http://stocks.investopedia.com/stock-analysis/2010/Monsanto-Growing-Slower-This-Spring-MON-DE-ADM-BG0409.aspx
... Article; Comments (0). Monsanto Growing Slower This Spring.
Posted: Apr 09, 2010 11:29 AM by Sham Gad. ...
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http://stocks.investopedia.com/stock-analysis/2010/Concho-Dives-Deeper-Into-Permian-CXO-XEC-FPP-APC0722.aspx
... dove deeper into the Permian Basin with its latest purchase of a private oil company,
and picked up additional acreage exposed to the Bone Spring, and Yeso ...
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http://stocks.investopedia.com/stock-analysis/2011/Cimarex-Energy-Sets-Up-For-2011-XEC-CWEI-CLR-CXO0218.aspx
... Mexico. One area slated for capital is the Bone Spring formation in New Mexico,
where Cimarex Energy has 38,000 net acres under lease. ...
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http://stocks.investopedia.com/stock-analysis/2011/Devon-Energy---Q2-2011-Review-DVN-ECA-KWK-CXO0816.aspx
... Devon Energy is working on a number of different plays, including the Avalon
Shale, Bone Spring, Wolfcamp and the Wolfberry. The ...
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http://stocks.investopedia.com/stock-analysis/2011/Cimarex-Energy-Works-The-Permian-And-Woodford--XEC0517.aspx
... One formation that Cimarex Energy is working on in the Permian Basin is the
Bone Spring located in New Mexico. The company has increased ...
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http://stocks.investopedia.com/stock-analysis/2011/Bullish-News-For-Agriculture-CROP-CNH-MON-SOIL-POT-CRBA0816.aspx
... Overall, the US Department of Agriculture cut its corn crop estimate by 4.1%,
soybeans by 5.2%, and spring-wheat production by 5.2%. ...
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http://stocks.investopedia.com/stock-analysis/2010/Approach-Resources-Permian-Player-AREX-CXO-SD-EP1213.aspx
... Concho Resources (NYSE:CXO) is working on the Bone Spring and other formations in
the Permian and recently picked up an additional 100,000 acres here. ...
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http://stocks.investopedia.com/stock-analysis/2010/The-Permian-Basin-Reborn-XEC-CXO-EP-OXY1116.aspx
... The company has targeted the Bone Spring, Abo and Paddock formations. Wells
that the company has recently reported in the Bone Spring ...
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