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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: rudedog who wrote (30367)	10/2/1999 7:52:00 PM
From: Kevin Podsiadlik	Read Replies (2) \| Respond to of 74651

But the clear impression of the sentence is that msft somehow was betting that the stock was going down, when the opposite is true. Clear to you, not at all to me. If you look at the entire article, then yes, there is the impression that MSFT is betting the stock to go down, but the whole point of the article is to explain the apparent paradox. The explanation comes from the fact that they are committing to buy back stock, and can, for all practical purposes, be considered to be short their own stock, and thus, out of necessity, hoping they can buy back at a reduced price. The selling of the puts, then, is an effort to hedge against the price of the stock going up as they try to buy back their stock. Are we on the same page yet?

To: rudedog who wrote (30367)	10/3/1999 10:07:00 AM
From: Exacctnt	Read Replies (1) \| Respond to of 74651

Rudedog, Your comments are correct regarding buying vs. selling put options. However, once again I feel compelled to quote MSFT's put warrants program. This is from the recently filed Form 10K. "Put Warrants To enhance its stock repurchase program, Microsoft sells put warrants to independent third parties. These put warrants entitle the holders to sell shares of Microsoft common stock to the Company on certain dates at specified prices. On June 30, 1999, 163 million warrants were outstanding with strike prices ranging from $59 to $65 per share. The put warrants expire between September 1999 and March 2002. The outstanding put warrants permit a net-share settlement at the Company's option and do not result in a put warrant liability on the balance sheet." Recent media articles and musings from traders continue to imply that MSFT is selling or "incorrectly", buying options on its stock in the open market. The put warrant program affects the market only if those independent third parties hedge their transaction with MSFT by buying options for themselves in the open market. Regards