Options Backdating and Forward dating Techniques

Joe Grundfest, professor of Law at Stanford Law School, divides the option backdating problem into three categories:

• Backdating - setting an earlier date on the option to guarantee a lower strike price, hence bigger payoff when exercised. Amnon Landan, CEO and founder of Mercury Interactive, was accused of doing this.
  
• Forward-dating, springloading, bullet-dodging - these unseemly manipulations may even be legal assuming the company followed disclosure rules. Forward-dating involves pricing an option at a future low point in the stock. "Springloading" means awarding options prior to good news, "bullet-dodging" means holding off issuing options until bad news has passed to get a more advantageous strike price.
  

Options may be backdated as well due to administrative mistake, but, hey, that's not interesting. This month, ex-COO of Monster, James Treacy, was sentenced to 2yrs for illegal options backdating.