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

To: Sig who wrote (165571)	5/24/2001 5:34:27 PM
From: GVTucker	Read Replies (2) \| Respond to of 176387

Net share settlement means that Dell would take shares from Goldman for cash or just exchange cash with Goldman for the net value of the options--Dell would have the option of which route to take. Notwithstanding the time value of the options, the 111mm put options have an intrinsic value of about $1.9 billion. This would be the net liability that Dell would have for those options if they all expired today. Oh, and also, this explains the seemingly unhedged position of Goldman. Because the probability is that a large portion of these options, at least the ones that expire soon, will indeed be in the money for Goldman, there is no need for that portion of the options to be hedged. As Dell stock approaches $39 and/or $44, Goldman would be buying shares on the way up as their exposure increased. It's called dynamic hedging in the options business, and it is dependent on things like delta and interest rates, etc. Rest assured that the Goldman options desk isn't going to make its money speculating on Dell stock in either direction. They just want to get their fees.