OT ... Pete, re "Because the exercise price of granted company stock options must be equal to the company stock market value at date of grant, such options have ZERO VALUE "
Contrary to your premise, the exercise price of a non-qualified stock option can be as low as $0. There is no "must equal the market price". That requirement is for tax-qualified stock options, for which there is no tax benefit to the company. myoptionvalue.com
Contrary to your conclusion, options -- granted with exercise price equal to market price on grant date -- have a non-zero value. Total option value equals the sum of intrinsic value and time value. The intrinsic value of such options equals $0 on grant date, but *not* the total value. investorwords.com
re "Moreover, by their terms, they are NON TRANSFERABLE (cannot be sold), from the date of grant through the date of exercise. Because of this latter issue, assigning a "value' to them based upon the model used to value options that are freely traded is a farce in my opinion."
I agree non-transferability reduces the value, relative to a similar option traded on an exchange -- so feel free to discount, as you are, the value given by an option model. But discounting all the way to $0 is illogical to me.
See the FASB 123 footnotes in 10-Ks and calculate the fair value of options for yourself. You'll see that many, if not most, companies use the Black-Scholes option model -- *exactly*. cboe.com
Opinion: John Shannon and GVTucker are not option-challenged. PerryA seems to have it figured out too. I suggest you read their posts carefully, and allow for the possibility that another's methodology might not be a farce -- and that perhaps it is your viewpoints that are farcical instead.
Ron |
