With forward start options the following applies:

A) they are often used for employee incentive schemes
B) Black-Scholes model can be used to value them with some adjustment in relation to dividends
C) they start at some time in the future, but are paid for now
D) all of these choices

Question

With forward start options the following applies:

A) they are often used for employee incentive schemes
B) Black-Scholes model can be used to value them with some adjustment in relation to dividends
C) they start at some time in the future, but are paid for now
D) all of these choices

Quizplus · Accepted Answer

With forward start options they start at some time in the future,but are paid for now.They are often used for employee incentive schemes and are generally set up so that the option is at-the-money at inception.The Black-Scholes model can be used to value them though there is some adjustment in relation to where the shares pay dividends prior to the start date.

With Forward Start Options the Following Applies