Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (118992)	5/19/2002 11:20:15 PM
From: rkral	Respond to of 152472

FWIW, personally i think options should be expensed up front based on Black-Scholes, and subsequently their effects should show up in share dilution (just as it happens in the real world). That is my viewpoint right now too .. assuming that by "their effects" you mean "their exercise". I would like to be able to place a one-time cost on the exercise .. e.g., by using John Shannon's approach .. or by comparing to an open market (naked or covered) call write. But I'm not there yet .. and maybe no one is, except John. Thanks for the informative reply. Ron

To: Wyätt Gwyön who wrote (118992)	5/20/2002 1:32:43 AM
From: Elroy	Respond to of 152472

If I get issued the right to buy 100 shares at $20 on March 1st and the stock is $20, and then when the quarter ends on March 31st the shares are $30, doesn't the diluted share count rise by 100 shares since my call options are in the money? If the company had to count my 100 share option as an expense, what would be the cost? The cost when issued and the shares were at the money, or the amount the options were in the money ($10 per share) when they report the March quarter results? And if the company has to report the diluted share count 100 higher (even though I have not yet exercised, so there aren't actually 100 more shares outstanding) and also report the option expense (whatever that amount is), isn't that double counting? Elroy