see options as an interest free loan on a stock. Just like your mortgage you pay a small deposit then pay the bank later. If the price of your house goes up everyone is happy if the price of your hose goes down you could potentially owe the bank more than the house is worth. Similarly if when you need to pay the remainder of the payment for your shares ( the exercise price ) the price of the share is less than the exercise price then you don’t have to pay it, it’s considered out of the money.
Hope this helps
Ann: Chairman & CEO Update & Review of Operations - Annual Report, page-121
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