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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (62942)	2/7/2003 4:32:02 PM
From: rkral	Respond to of 77400

OT ... Lizzie, I took the liberty of posting the essence of my reply at #reply-18545006. Here I take issue with the headline, "_Siebel's Case Shows a Hole in Black-Scholes_", of Ronna Abramson's article. The Black-Scholes model only results in a mathematical formula to determine the value of an option. The option value, so determined, is used to expense options per SFAS 123. In the case of the SEBL's settlement (repurchase) of certain outstanding options, the Black-Scholes formula was again used to assess current option value, IMHO. It's the best option valuation tool available today. (The binomial option pricing model is somewhat better when the underlying stock pays a dividend.) Myron S. Scholes and Robert C. Merton received the 1997 Nobel Prize in Economics in recognition of their effort in developing the option valuation model. Mr. Black was deceased at the date of the award. ams.org nobel.se IMO, saying "a Hole in Black-Scholes" is an insult to Mr. Black and Mr. Scholes. If the option model is being misused, it is not the fault of Mr. Black or Mr. Scholes .. and I believe *the model is not being misused. Now let me return an insult. By saying "a Hole in Black-Scholes", IMO some are indicating holes in their collective heads. Can't tell who. Could be the editor, could be Ms. Abramson, or it could be the analyst upon whom Ms. Abramson relied .. or maybe it's all three. Dunno. Were my wine glass sitting here empty instead of full, you'd probably be reading what I really* think. <gg> Regards, Ron