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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 78.40

+1.9%

3:59 PM EST

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To: Lizzie Tudor who wrote (61178)	8/29/2002 11:25:37 PM
From: BWAC	Read Replies (1) of 77400

<I believe options are accounted for currently in a clean, undisputable manner, and that is the fully diluted EPS.> Thats what I keep coming back to as well. Plus this: schaeffersresearch.com Click on StreetTools. Then Option Tools. Then Pricing calculator. Take MSFT vs. KO for Sept 2005 55 Strike Option. Assume beginning price was $50 for both stocks today. With MSFT the theoretical value and expense of 1 option would be $14.59 With KO the same parameters would be $7.65 (be sure and imput in the 20 cent quarterly dividend). Difference due mainly to the different implied volatilities. So should one company's Option expense be 100plus% higher for the same exact grant? Should the estimated expense be so highly predicated upon the volatility of the stock? Even though such high volatility ALSO increases the chance that the option grant will become worthless?

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