In the investment market, cash option means that after the transaction process is over, the party who needs to pay the transaction object can choose to actually pay the transaction object in cash or perform delivery procedures. It is also called "cash delivery" in commodity futures industry.

There is a similar operation in the securities market. This method of allowing cash payment instead of physical payment is called cash option. According to Article 74 of the Company Law, in any of the following circumstances, the shareholders who voted against the resolution of the shareholders' meeting may request the company to purchase its equity at a reasonable price: the company has not distributed profits to shareholders for five consecutive years, but the company has made profits for five consecutive years and meets the conditions for distributing profits stipulated in this Law; The merger, division or transfer of the company's main property; Upon the expiration of the business term stipulated in the Articles of Association or other dissolution reasons stipulated in the Articles of Association, the shareholders' meeting will adopt a resolution to amend the Articles of Association to make the Company survive.

The core criterion for investors to exercise their rights is that the share price of the target company is lower than the exercise price. The essence of cash option is a put right, that is, the right to sell the shares of the target company at the agreed exercise price. Due to the volatility of the secondary market share price, it will inevitably lead to the difference between the agreed price (that is, the exercise price of cash options) and the secondary market share price of the target company during the reporting period. As a rational investor, only when the share price of the listed company's secondary market is lower than the agreed price (that is, the exercise price of cash options) during the exercise period can investors make profits by declaring the exercise, otherwise, it will directly lead to losses.

Example: Company A absorbs and merges Company B, and the controlling shareholder of Company A promises to provide cash options to the shareholders of merged Company B who have objections to the absorption and merger plan. The price of the cash option is determined to be 8.50 yuan based on the average price of the 20 trading days before the announcement of the resolution of the board of directors of Company A, and the exercise period is 20 12 1.9 to 20 12 1.03. Investor Zhang holds 65,438+000 cash options and 65,438+000 shares of Company A during the exercise period. During the whole exercise reporting period, the lowest share price of Company A is 9.25 yuan, which is much higher than the exercise price of cash options. During the exercise period, if investor Zhang chooses to declare all the exercise rights, that is, he chooses to sell the shares of Company A at a price of 8.50 yuan per share, which will at least lead to investment loss of 75 yuan.