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

To: jt101 who wrote (220)	8/19/2002 1:00:42 AM
From: Exacctnt	Read Replies (1) \| Respond to of 786

<<<Even as of 08/15/2003, the cost/expenses incurred by me in this scenario is $3.4 not $2/- >>> Yes, the real cost to you would be $3.40. However, it was a cash transaction, a real out-of-pocket cost. A company issuing an option spends no cash upon granting the option. I see no comparison here. Go back to my previous example about NTAP. Looking over NTAP's Form 10-k shows the fair value price of options granted in 2000, 2001, and 2002 at $13.98, $26.84, and $10.03. The options expected life are 3.2, 3.21, and 3.33 years. NTAP's current market price is $9.17. It's leap call options at $10 strike price for 2003, 2004 and 2005 are currently trading at $1.88, $3.40, and $4.20. An important additional piece of information regarding those option grants. For the years 2000, 2001, and 2002, the weighted average grant price was $28.60, $45.03, and $16.15. What that means is that employees are not going to exercise those options until the stock's market price rises above the grant price. Comparing costs at the $10 strike price was illustrative only and was not a practical example. Since NTAP's current market price is $9.17, the only leap strike prices that ought to be considered are those that are closest to the original grant price, and those prices are minuscule compared to what NTAP is expensing in its footnotes.