The Securities and Exchange Commission has okayed a new form of valuing options devised by Nevada State Bank’s parent, Zions Bancorporation, reports the New York Times. The product is designed to offer a cheaper valuation for options.

In the old days when options weren’t expensed it wasn’t a problem but the standard accepted method is producing valuations that are too high and Zions has come up with a mini-auction to investors to find an alternative. The method involves selling similar securties, dubbed "Esoars," to investors to find the "market" value of options.

There will be a two-month delay before investors can get the security so that could depress the price although the banker who designed the security says it could pay interest to cover that.

The key issue will be whether a real auction can be held when both buyer and seller want the lowest price possible. That’s the part the SEC will be watching. In the meanwhile, Zions will be trying to offer Esoars to other companies looking for cheaper alternatives to the current Black-Scholes methodology. Of course, if the investors rush in and bid Esoars up, the whole concept will be out of the money.