Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Tushar Patel who wrote (173102)	2/18/2003 9:05:45 AM
From: GVTucker	Respond to of 186894

[by me]: Yes, it would be more accurate to tax things at time of grant, but over the long haul, the actual value at time of exercise will end up equaling the value at time of grant. [by Tushar Patel]: Can you explain why this is true? This isn't necessarily true by rule. It makes the assumption that Black-Scholes can accurately value options ex ante. My experience is that it can, especially once the sample size gets large, hence my qualifier over the long haul. If Black-Scholes does indeed value options properly, then it stands to reason that an option should have a normal expected return. In the real world, some options expire worthless and some are worth a lot. For Black-Scholes, all of them are in between. In aggregate, if Black-Scholes values things right, the totals should be the same.