Anabtawi on Spring-loaded Options
Posted by Josh Wright on July 10, 2006
Over at Professor Bainbridge’s place, Iman Anabtawi has some thoughts on the granting of “spring-loaded” options, an option granted at a market price that does not incorporate some favorable non-public information, and insider trading laws. The practice is analytically similar to granting a discount option (one with an exercise price below the market price) and is related to backdating (issued retroactively after the information is released). Check it out.
UPDATE: Ribstein responds.
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Abnormal Returns » Blog Archive » Tuesday links: stealth stocks said
[...] ProfessorBainbridge.com looks at the spring-loaded option grants and insider trading. (via Truth on the Market) [...]
TRUTH ON THE MARKET » *Why* Are Directors Awarding Spring-Loaded Options? said
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