SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 76.13+0.1%10:53 AM EST
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: PerryA who wrote (64570)9/15/2003 3:04:24 AM
From: Don Lloyd  Read Replies (2) of 77400
 
Perry,

In any case, it is obvious that options have some value prior to expiration regardless of whether they end up expiring worthless or not.

If you write a check to cash, and give it to me, it has value to me and I am richer if I can either cash it or enforce it in a court of law.

If you write the check and merely put it in your pocket, you cannot make yourself richer no matter what amount you write or how many times you repeat the exercise.

Much the same thing relates a company and its own stock or options. A company cannot own itself in the sense that everything it owns is really owned by the outstanding shareholders, including new stock certificates in the company's hands. New stock has no value to the company itself because it can be created without effective limit at virtually no cost. Since one new share is effectively identical to another of the same class, the company suffers no opportunity cost when it makes an employee grant because it can simply print up a new certificate.

The same effect occurs with a Treasury warehouse holding new undistributed Federal Reserve Notes. If the warehouse burns down, the loss has nothing to do with the face value of the notes destroyed, as new ones can simply be printed, just like company stock from the point of view of the company.

Regards, Don
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News