Backdating involves writing a date on a contract or negotiable instrument that is earlier than the date on which it was signed. For example, a contract could be signed on June 30, but backdated to May 31. Doing so makes the contract or instrument valid as of the earlier date. Most famously, stock option agreements have been backdated to the date on which the associated stock price was at its lowest, thereby allowing the option recipient to maximize the potential profit from the option. Backdating is usually illegal, since it is used to gain an advantage for the person benefiting from the underlying contract or instrument.

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