what is a low exercise price option lepo 
a low exercise price option lepo is a european style call option with an exercise price of one cent both buyer and seller operate on margin and because it is almost a certainty that the holder will exercise the option at maturity it is somewhat similar to a futures contract understanding a low exercise price option lepo lepos originated in switzerland and quickly spread to finland for the avoidance of paying the required stamp duties that were charged on stock trading since the strike price is so close to zero the investor purchasing the lepo gains most of the features of owning the share directly with the major exceptions of dividends and voting rights the australian stock exchange asx began listing lepo options in 1995 and as of july 2021 offers them on nearly 100 asx listed companies 12lepos differ from regular or standard options in several key ways conceptually lepos also act as forward contracts or futures standard options give the holder the right but not the obligation to purchase the underlying security at or before expiration however since the strike price is so low the odds that the option will expire itm and therefore automatically exercise at the expiration date are a near certainty essentially a lepo is a futures contract with the obligation to take delivery of course all options and futures may be sold to close out the position and avoid taking delivery of the underlying advantages and disadvantages of low exercise price options lepos since lepos are essentially a deep itm call option they have a very high delta value and trade similarly to the underlying stock because these options are of the european style meaning they are only able to be exercised at expiration their near zero strike price almost guarantees that the holder will take delivery of shares at that time the advantage over owning the stock outright is the participation in the performance of the underlying without any financial or legal issues caused by the direct holding of the stock deep itm options have very high premiums or initial costs however the investor holds lepos on margin resulting in a lower upfront cost again the benefits must be weighed against the disadvantages of having no claim on dividends or the ability to vote the shares 