Formerly About Applied Materials Message Board

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Politics : Formerly About Applied Materials

AMAT 322.34

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Jan 23 9:30 AM EST

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To: Tito L. Nisperos Jr. who wrote (4884)	5/27/1997 7:01:00 PM
From: Kumar Nathan	of 70976

Tito: I think there will be a sudden surge of option trading by next week. The reason is that the employee stock purchase plan cut-off date is May 30th or 31st. Therefore to protect and lock-in the price there will be some unusual volume during this week. Just a heads up. I read in last week WSJ that companies routinely trade options on their own stocks. Journal said that Intel made $450M last year on trading Intel Option. Currently they hold $1B worth of Intel Stock in options. Likewise MSFT has $2B of their securities in options. This is a staggering number. In my opinion is that this should be banned. Corporations should not be in the business of trading options. People argue that they need to do this to hedge their positions but there is a lot of fineline between hedging and trading options on corporate names with the relevant informations in their pocket. It is like a poker game where one is allowed to play with all the cards open and the rest should play with closed eyes and ears. I am uneasy when I read that Intel made half-a-billion profit on option trading of their own Intel stock. Regards Kumar.

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