Elmer: If you want to consider it a loss after "giving it away" then it must have had value prior to "giving it away". Where in Intel's balance sheet can I find the value of all the options they haven't yet granted?
Before giving away an option they have stock. (Although it's irrelevant whether they have stock for the sake of the argument, they're still giving a contract away.) After, they have stock, and are short an option. So their net assets decrease by the value of the option, by any kind of sensible accounting.
That option they gave away has value, and the value it has is very measurable and easily sold for cash.
The net effect, of course, is having this thing, which behaves like a stock capped off at a certain point, but that's irrelevant, because what I'm giving away is precisely the value of removing that cap. (What I'm losing in value by being short an option is the same whether I hold stock or not, at every point in time. Obviously if I'm short an option, I'm hoping it will be eventually be worthless, but it's not worthless right now if someone's bidding on it, is it?)
Would you consider it a profit if you sold me call options at half market value? (You're receiving cash for no expense, right?) If so, I think I could think of an agreement that would be beneficial to both of us:)
William |
