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To: patron_anejo_por_favor who wrote (202385)	11/5/2002 12:00:11 PM
From: ild	Read Replies (2) \| Respond to of 436258

It looks like all and every company was selling naked puts. Well, it was "free money", wasn't it? -G- Over the past two years, Household, one of the largest U.S. lenders to consumers with poor credit histories, agreed to buy tens of millions of its own shares by entering into a series of "forward purchase agreements." The contracts are essentially bets on the price of Household's shares. If Household loses on the current contracts -- and that appears increasingly likely -- it could be obligated to pay $259.7 million for 4.9 million shares currently valued at about $119 million. online.wsj.com

To: patron_anejo_por_favor who wrote (202385)	11/5/2002 12:06:08 PM
From: mishedlo	Read Replies (2) \| Respond to of 436258

Looks like Household International played the same game as Dell and EDS by selling naked puts on its own stock, apparently under the assumption it would never go down. Now they're looking at an obligation to buy back 4.9 million shares at about $53 each after just raising money by selling shares at $21.39 each. Of course this destruction of shareholder value will never appear on the income statement. online.wsj.com <Last month, when Household International sold 18.7 million shares of its common stock, many on Wall Street cheered the deal, which raised about $400 million, helping to ease concerns about the finance company's liquidity. But some analysts note that another less-heralded set of transactions could cause some of that money to be spent for other purposes: Household buying its own shares at prices twice the stock's current price. Over the past two years, Household, one of the largest U.S. lenders to consumers with poor credit histories, agreed to buy tens of millions of its own shares by entering into a series of "forward purchase agreements." The contracts are essentially bets on the price of Household's shares. If Household loses on the current contracts -- and that appears increasingly likely -- it could be obligated to pay $259.7 million for 4.9 million shares currently valued at about $119 million.>