Listed options lagging share price

[56gsa]

Question for you all

What are the reasons listed options would lag the share price for a company? eg the gap between SP and option price is greater than the option excise price...

Example I'm looking at is ZYB/ZYB where there is a 1.8 cent gap but excise price is 1.2 cents ...

Some reasons I can think of:
- market has priced in anticpated fall of SP (altho this doesn't seem to be the case cause SP is on a solid run up)
- expect news could be rights offer for shareholders - so more interest in the shares
- do people assume its a 2 cent option?

Interested in your thoughts... and experience of this more generally

 

[Triple B]

Gday 56
The following is guesswork
I believe Listed asx options use a market maker to help provide liquidity
As there is low liquidity the larger gap may be to help the market maker, make market without incurring losses.
A market maker is contracted by the ASX to provide the liquidity for the options. They are obligated to take the other side of your trade. they are allowed to make a spread to help protect from loss I believe.

 

[skyQuake]

Companies oppies like ZYBOA take ages to get exercised.
Aus punters have learned that during the exercise period (where you can't sell), the stock can easily reverse and you're trapped in an overpriced stock.
Thus the discount. Also 99.9% of the time there's no borrow available to short the head stock against the option as a hedge.