Bob Brinker: Market Savant & Radio Host Message Board

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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host

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To: Skeeter Bug who wrote (5180)	5/25/1998 11:39:00 AM
From: Gersh Avery	of 42834

Skeeter .. Re: stock options for employees This is somewhat a murky topic. Stock for employee stock options are, generally, purchased off the market. Therefore if an employee has options with strike price 10 and the current price is 30 then the company would have to take a loss of 20 to satisfy the option. These days what many companies are doing is selling puts on their own stock. That reduces the purchase price of the stock for these purposes and helps the company to pick up the stock at a low spot. The problem this presents is when the market just goes up. The companies reserves of stock for employee option plans gets depleted. Then the company has to do one of two things. Either purchase stock at whatever the current market is or short its own stock and wait for the market to fall. Gersh

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