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Strategies & Market Trends : Tech Stock Options
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To: Patrick Slevin who wrote (27709)11/3/1997 3:50:00 AM
From: Fred Weiss  Read Replies (1) of 58727
 
My point is....these companies have buyback programs in place and this is one way the program is facilitated. Thru stock buybacks a company reduces the number of outstanding shares making each remaining share more valuable.

If that's what they do with the stock, Pat, retire it, then I would agree. If, on the other hand, they issue stock options to some exec who then puts it back into the marketplace, then they are operating with an unfair advantage without reducing liquidity. I would also point out that the most common practice is to sell puts and put the money into their bank account without any effect on liquidity except to take from some less knowledgable individual who isn't as privy to their day to day performance or future outlook.

I personally see very little difference between stocks and options in this instance, except that it places a legal temptation in front of every board of directors or CFO to profit from inside knowledge or, in fact, to juggle figures at earnings time.

Trader Spud
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