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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: hdl who wrote (141491)	9/4/1999 5:53:00 PM
From: Sig	Respond to of 176387

HDL: My reading on options Sample In May: Dell sells 10k puts for $2 ( Income $2 mil) Dell buys 10k calls at $2 ... (cost $2 mil) In August: Puts expire worthless Dell exercises calls at $40 strike ( cost $40 mil) Results: Dell has invested $40mm and has 1mm extra shares in treasury. These can be used to grant options to employees in lieu of higher pay or as a bonus. Usually there is a waiting period, perhaps 5 years, before the granted option can be exercised. So the stock is retained in the treasury. IMO I see no definable/reportable profit or loss in this transaction. The stock price may go up or down( been there, done that)hehe. Don't like it One effect of possible value to shareholders is removal of 1mm shares from the market which may enhance the price a bit but it cost the company $40mm in capital to do that. Another plus is more shares in the treasury, perhaps to be used for future stock splits. In speaking of buybacks,Dell had the authority to buy back 1Bil shares( they don't mess around much, do they)(G). But last I looked they had already bought back over 750mm and are down to dealing with 10's of millions now.( these figures adjusted for splits) Just MHO, FWIW, SES