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

To: rkral who wrote (63659)	4/20/2003 7:38:40 PM
From: Lizzie Tudor	Respond to of 77400

don't you think your position is the most likely one to be incorrect? Oh yeah, for sure rkral. I have no doubt in my mind that my position is the most "technically incorrect" on the matter vs. the financial folks here. I think I have more experience with options in practice and how they are used, and the pay and personnel ramifications of using options vs. not using them for the big companies that issue them the most though. That is just the sense I have. A company acts like a covered call writer. It buys 1000 shares of its own stock at $10 (all $ are per share), and simultaneously grants 1000 option shares to its (collective) employee at an exercise price of $10. Using an acceptable option valuation model, the fair value is determined to be $4. I see this argument, and it has merit, but in my mind the employee stock option is more like a covered call which is covered by the employee. You know, kind of like a call is written by the employer, but when the employee leaves, the call is nullified... To me it is not quite as simple as a company writing a call and selling it. If not for the employee aspect to the equation, then I could see applying a $$ amt to the transaction, it would be easier at least. Even then you have other similar situations in business that are not expensed though- (unexpired leases for example are not expensed). The FASB says the expense is $4. When did they say this... sorry I haven't kept up.