Underwater Option

Underwater Option

An out-of-the-money stock option. That is, it describes an option in which the underlying asset is a stock that is currently trading for less than the strike price of the option. For example, an executive at a publicly-traded company may have stock options in which he/she may buy the stock of his/her own company for $80 per share. If the stock is currently trading at $60 per share, the options are worthless.
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Panel B of Table IV shows the values of vega-to-delta and vega as a percentage of salary plus bonus for all executive-year observations, and also the underwater option observations.
And in practice, the underwater option problem causes significant problems for companies that rely heavily on options.
Risk factors, such as stock price volatility help reduce the option value, but an underwater option may have current value.
One-for-one exchanges, where the optionholder receives a new, market-priced option for each underwater option, are the most controversial, as the executive recovers the entire value lost in the stock market decline, and so is relieved of the pain felt by the shareholders.
This generated a great deal of interest from all over the world and inspired us to look at the underwater option as we are aware that Nessie does not often make it to the surface.
While these four design elements featured prominently in successful exchange proposals, more mature organizations that are largely held by institutional investors must be careful when using recent underwater option exchanges filed with the SEC as best practices benchmarks, according to Harsen.
Determining the actual ratio of old underwater option shares to new option or restricted stock shares is an accounting-driven exercise focused on the goal of cost neutrality, according to Terry Adamson, senior vice president, Radford Surveys + Consulting, who collaborated with Harsen on the exchange program study.
R) (Nasdaq:INFS) today announced that the board of directors approved a plan that provides certain employees with the choice of canceling underwater option grants in exchange for new option grants with a new vesting schedule.
Nasdaq: INFS), today announced that the board of directors approved a plan that provides employees with the choice of canceling certain underwater option grants in exchange for new option grants with a new vesting schedule.
A number of functions convenient for underwater photography have also been added, including Underwater options for white balance and auto distortion control.
It is designed to provide more underwater options for people that currently use a Nucleus 5 Sound Processor, which already has the highest level of water resistance for an ear level device.
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