How high will Microsoft fly? Message Board

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Technology Stocks : How high will Microsoft fly?

MSFT 507.49

-0.6%

Nov 17 3:59 PM EST

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To: DavidD who wrote (12598)	11/25/1998 12:53:00 PM
From: Reginald Middleton	Read Replies (1) of 74651

<Nonetheless, this relates to the p/e premium for the stock and how much one is willing to own. Selling options naked is risky business.> MSFT is not selling options naked. They are both a natural consumer and producer of the stocks and warrants. They have a need to byuy stocks below the ESO strike price. Since they have stocks in treasury and the option to settle in cash, they are covered on the warrants if they are called. The put warrant sales are simply a low cost, low risk method of funding a share repurchase plan. The P/E premium for the stock has very little to do with any of this. For reference, see rcmfinancial.com

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