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Strategies & Market Trends : Employee Stock Options - NQSOs & ISOs -- Ignore unavailable to you. Want to Upgrade?

To: rkral who wrote (80)	6/19/2002 9:20:32 PM
From: Stock Farmer	Read Replies (1) \| Respond to of 786

When I described "expected future value" I very clearly defined this as the difference between what the stock is expected to be worth in the future and the strike price. I think you will note that this BY DEFINITION is equal to the sum of intrinsic value plus time premium. Simply telling me that you interpret this to mean that the time premium is equal to the expected future value is in effect merely pointless twisting of semantics. If you expect an option to be worth $5.00, and the current intrinsic value is $1.00, that makes the time premium worth $4.00. Right? Furthermore, by expecting the option to be worth $5.00 you expect the market price to be $5.00 above the market price. In present value terms. Right? Start again very simply. You write an option. You give it to me. Both of us look at it and say that we think it will be worth $5 in 5 years time. You might be mathematically precise and state that this $5 is all "time premium" because the "intrinsic value" is zero. Or maybe the intrinsic value is $3 and the time premium is $2. In the end however, the split between the two is somewhat academic when it comes to how much money lands in my pocket and how much money I extract from yours. I am far less knowledgeable and much less sophisticated about these things. I just look at it and say "I expect the thing to be worth $5". How much has that option actually cost you? You can jump up and down and claim that you have given me something "worth" $5.00 and so that act of generosity cost you $5.00 because you might have given it to someone else. Or you can say that since the future hasn't yet unfolded that you haven't really gained or lost anything, but that you expect to lose $5.00 in the future. In either case we could agree that I have something of value in my pocket, because I won't simply give it back to you without a fight. I'm not stupid. Not because I think it's got the purchasing power of a $5 bill, but because if I give it to you I'm guaranteed to get $0.00, but if I keep it I might get more. A no-downside risk no brainer. Anyway, you could quite legitimately chock up an accounting cost of $5.00 at the instant of that nice generosity. So on your ledger of assets you write (5.00) under "reserves for paying John". Fast forward five years. That cost of $5.00 you expected to incur has mushroomed to $20. Somehow you have to cough up $15 more than you expected. So you do. And you are a bit sad. But I am very happy. Because without a doubt I ended up with $20.00 The question I have for you is, looking backwards from the point of exercise, what did this option ACTUALLY cost you? A measely $5.00? Or the full $20? How do you answer? More important, how do you ACCOUNT for this deviation from expectation? John

To: rkral who wrote (80)	6/21/2002 8:52:08 PM
From: Jon Koplik	Respond to of 786

Off topic : AP News -- Boar's Head Recalls Proscuitto. I read this headline, and thought : Huh ??? A severed head of a pig is reminiscing about some food (proscuitto) that it once ate (when the head was still attached to an animal that ate food) (?) Here's the story : ************************************ June 21, 2002 Boar's Head Recalls Proscuitto By THE ASSOCIATED PRESS Filed at 7:50 p.m. ET WASHINGTON (AP) -- Boar's Head Provision Co. is recalling 2,300 pounds of imported prosciutto because a routine inspection found it may be contaminated with the potentially deadly Listeria monocytogenes. The company, based in New York City, voluntarily recalled the meat, which has apparently not caused any illness, the Agriculture Department's Food Safety and Inspection Service said Friday. The acting administrator for the inspection service said consumers should check their refrigerators for the meat and diners may want to ask if meals made with cured ham contain Boar's Head prosciutto. The meat was labeled ``ITALIAN DELICACIES, KEEP REFRIGERATED, Boar's Head Brand, BONELESS, PROSCIUTTO DI PARMA.'' Each package contains a single, 16-pound ham and has ``I-166'' inside the USDA seal of inspection. Each case is imprinted with the foreign establishment number, ``1-480L CEE.'' The ham was packaged on May 14-15 and distributed nationwide. The problem was discovered through a routine inspection. Listeria monocytogenes can cause listeriosis, a rare disease that can kill. Listeriosis can cause high fever, severe headache, neck stiffness and nausea. It can also cause miscarriages, stillbirths and fatal infections in those with weak immune systems. ^------ On the Net: USDA Food Safety and Inspection Service: fsis.usda.gov Copyright 2002 The Associated Press

To: rkral who wrote (80)	6/22/2002 11:09:43 PM
From: Jon Koplik	Respond to of 786

Off topic -- Antarctic scientists toss frozen turkey. June 22, 2002 Antarctic Scientists Mark Solstice By THE ASSOCIATED PRESS Filed at 12:50 p.m. ET WELLINGTON, New Zealand (AP) -- New Zealanders and Americans working on scientific bases in Antarctica celebrated the start of winter a day late Saturday by swimming naked in an ice hole and tossing a frozen turkey in mock Scottish Highland Games. The midwinter solstice is the shortest day of the year and falls on June 21 in the southern hemisphere. For the staff at New Zealand's Scott Base on the Ross Sea Coast and the nearby U.S. McMurdo Station, it marks the halfway point to spring, which ushers in sunlight and the first supply flight in months. Both bases are an eight-hour flight south from New Zealand. ``We're all pleased to get past the halfway (point) through winter and look forward to the end of the darkness with the return of daylight on Aug. 19,'' said Scott Base winter manager Luke Haddleton. The first supply flight of spring is due on Aug. 19. Antarctica has been in darkness round-the-clock since April 25 and the first glimmer of spring sunlight will not be visible until mid-August. Still, staff and scientists working at the bases took time out to cavort in the frozen conditions. New Zealanders and Americans alike took turns diving into a hole cut in 8-foot-thick ice, before sprinting to a hot tub about 100 yards away. They later gathered for the Highland ``Frozen Games,'' with the traditional shot put replaced by a frozen turkey. Saturday's celebration followed the centenary on Friday of the first midwinter stopover on the frozen continent by British explorer Robert Falcon Scott. Hundreds of scientists and support staff spend the winter in Antarctica conducting experiments on the ice. Copyright 2002 The Associated Press