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

To: Stock Farmer who wrote (86)	6/20/2002 11:10:30 AM
From: rkral	Read Replies (1) \| Respond to of 786

RK: JUST PLAYING A GAME WITH THE FOLLOWING JS: Let me know when you are serious.<< Gee whiz, John. It's OK to lighten up a little bit. I was just warning the reader that my answers shouldn't be taken too seriously from that point on. And you took that out of context .. since I also explained (OK, just hinted) I was unsure of reality dealing with the option exercise. >>Had I considered that the sun would rise in the morning I might also have said that.<< Well, actually you did. I don't think I need to quote. >>So when I look forward to exercising an option and putting an amount (say $5.00) in my pocket, then I don't give a rats ass what the current intrinsic value is, nor by extension the time premium. It's satisfactory to say I expect to get $5.00.<< Sure. You can choose to ignore the mechanism and the details. But you were the one that wanted a proof that OV = PV + EV. Not me. John, you're the logician here. Try to apply logic to the overall discussion too. >>... by extension I expect that $5.00 to be the difference between what I pay for the stock and what I can sell it for. Which would kind of be exactly equal to the difference between strike and market in the future.<< I agree .. as long as a discount to PV is included somewhere. >>But if you want something irrelevant and complex to think about, try figuring out whether or not shareholders gain anything if an option expires worthless. Or how about this. When an option is exercised the holder puts intrinsic value in his pocket only and leaves time premium on the table. Is this loss of value a benefit to shareholders?<< You've been eliciting my opinions .. and then shooting bullets at them. How about you give your opinions to those two questions .. and then I'll shoot the bullets? And while I'm on protocol, let me point out the obvious. I presented the OV = PV + EV proof you asked for. I haven't seen any agree or disagree response .. on a paragraph by paragraph basis .. point by point, if need be, .. to show me where you think my proof is incorrect. Ron