Intel Corporation (INTC) Message Board

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Technology Stocks : Intel Corporation (INTC)

INTC 48.72

+3.0%

3:59 PM EST

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To: Badger who wrote (63884)	9/5/1998 9:50:00 AM
From: rudedog	Read Replies (1) of 186894

Badger - when thinking about the gain on your options, remember that your cost basis is 0. Lets say you get your options at 80. when stock goes to 81, your percent gain is infinite. when it goes to 82, you gain 100% over the position at 81. Your evaluation should be based on the difference between the strike price and current price. Keep in mind that sales will almost certainly be taxed as ordinary income. As a guy who has had some experience in this, I would suggest holding any options of this class until the strike price is a fraction of the current price (say 20%). That may seem like a fantasy now but it has happened to me several times, and if you sell early you will find that you have decreased your leverage. As an exercise, do a spreadsheet where you sell the options then immediately buy back any available instrument on Intel stock. See if you can begin to approach the risk-reward profile of the pre-sale position. BTW I have found Black-Scholes to be completely useless in evaluating employee stock options, even though many use this method. IMHO you would do better with a magic 8-ball or ouija board. FWIW...

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