why are avzo's so cheap, page-8

imo it is to do with the volatility of the sp. The lag is a bit of a buffer 'just in case'. But as Bilbo pointed out, there really is no difference in risk between AVZ and AVZO.
Options are far riskier when you get close to conversion, which is when the options price generally trades at a gap greater than the conversion price (ie 3c + 0.5-1c). That is not the case here where they should actually be trading closer to the head price than the conversion (ie 3c - 0.5-1c).
At this point in time so far out from conversion, it is really just about how much you want to pay for exposure to AVZ, and you are currently getting a discounted entry with the options. I have only been buying options for that reason.