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Technology Stocks : All About Sun Microsystems -- Ignore unavailable to you. Want to Upgrade?

To: Charles Tutt who wrote (50694)	7/25/2002 3:33:26 PM
From: Ali Chen	Read Replies (1) \| Respond to of 64865

"Options have value (until they expire), just like insurance and other actuarial instruments, from the time they're created. In fact, there's a whole market devoted to them in Chicago." That's what I fail to understand. It is tough to believe that such a reputable individual could be mistaken, so I still try to clear my confusion. Maybe there is a terminological misinterpretation? Look, the market in Chicago sells and buys options issued by financial institutions and individuals. These options are intended for trades. In case of "company stock options", you cannot sell or buy them. They are not subject to trade, therefore the value cannot be established in a normal market way, they are personal options. Of course options do have a value since they motivate employees to do their job with less immediate compensation, with just expectations of future pay-offs. The options do have value, but they cost nothing to the company. Ideally, if you can persuade your workers to work only for options, without immediate salary, it looks like it's the most efficient way to run a business. Since the options are designed to pass your cost of labor to investing public, the public must be concerned with this practice, not business. Or, you are saying that the company options are like insurance, to ensure you keep your key workers, so you must pay premium to someone? But in this case you should be paying to yourself, since it is you (business) who takes the risk of such "insurance". Again does not make much sense. What I am missing here? - Ali