Which of the following are features of LEPOs?

A) they are traded on the ASX
B) the exercise price is typically $ \$ 0.01 $
C) they are European-type options
D) all of these choices

Question

Which of the following are features of LEPOs?

A) they are traded on the ASX
B) the exercise price is typically $ \$ 0.01 $
C) they are European-type options
D) all of these choices

Quizplus · Accepted Answer

Low exercise price options (LEPOs)are physical delivery-based European-type options with an exercise price typically of one cent.LEPOs are traded on the ASX via the derivatives trading facility in the same way that standard options are traded.Similar to standard options written on shares,LEPOs generally require delivery of 1000 shares on expiry of the contract but,unlike standard options on shares,only one option is issued for each expiry,as there is only one exercise price for each expiry date.An important feature of these options is the requirement for deposit and margining of the premium on a daily basis.Thus a premium is not paid on taking the option position.Rather,the option writer and taker are liable for margin adjustments as the option premium changes over time.If the premium rises (falls),then the option writer's (taker's)margin account is reduced (increased)by the amount of the rise (fall),and the option taker's (writer's)account is increased (decreased)by the same amount.

Which of the Following Are Features of LEPOs? A) $0.01 \$ 0.01 $0.01

Which of the Following Are Features of LEPOs?

A) $\$ 0.01$