LEPO = Low Exercise Price Option

A LEPO is simply a conventional call option with a strike price close to zero. Hence, the LEPO is in-the-money and has a delta close to 1. The LEPO is a replacement contract for the underlying asset which differs to a direct investment as the investor in a LEPO foregoes regular dividend yields. To compensate for this, the price of the LEPO includes a discount which reduces its price by the present value of the dividends expected until maturity.