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To: Uncle Frank who wrote (418)	8/20/2002 6:28:14 PM
From: DiB	Read Replies (1) \| Respond to of 562

>It would be interesting to hear a few examples, Huey. I can't imagine how one could profit from a non-transferrable underwater option. If I'm not mistaken, one example could be buying a put with the strike price close to the option's strike price and expiration date after the first batch of stock options becomes exercisable... This won't deliver immediate cash to the employee though...

To: Uncle Frank who wrote (418)	8/20/2002 7:16:46 PM
From: hueyone	Read Replies (1) \| Respond to of 562

They gambled that they would be valuable in the future. They lost on that gamble, since options with Bubble era strike prices aren't worth the paper they were printed on. There are also plenty of cases where options turned out be worth a lot of money. In either case, they have a value at date of grant and there are tools to estimate the value. It is really quite comical that I am sitting here with a successful trader/investor, well experienced in puts and call options trading, debating the point whether options have a value at date of grant. How in the world do you justify paying money for options to purchase stocks on an everyday basis and then turn around and claim options have no value when they are given to employees? It would be interesting to hear a few examples.--(of how to capitalize on options the day they are granted) I don't have time nor reason to investigate this, so I will only reproduce the link to the quote from Buffet. Happy Hunting. washingtonpost.com there are qualified experts on both sides of the debate that hold diametrically opposed opinions. Actually, that does not really seem to be the case. When Kaplan and Merton from Harvard Business school made their rather brazen statement in the Wall Street Journal last month, I did not read one single peep or protest from any other finance or accounting scholars. That statement from Kaplan and Merton was There are some issues on which accounting and finance professors disagree, but the expensing of employee stock options is not one of them. Despite the pronouncements of a few renegades in our disciplines, we believe there is near unanimity of opinion among scholars in the fields of accounting and finance that the value of employee stock options should be expensed on a firm's income statement at the time they are granted. Finance and accounting scholars without a special interest in seeing this options loophole continue, come to the same conclusion time and time again, and that is that stock options should be expensed on the income statements. online.wsj.com Huey---Which points of Dr. Pacter's treatise do you disagree with? Uncle Frank---I did not (read the piece). Since this isn't the curmudgeon thread, I will hold back from responding to that one. Best, Huey