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

To: RetiredNow who wrote (64034)	5/14/2003 10:56:48 PM
From: Lizzie Tudor	Read Replies (2) \| Respond to of 77400

sure mindmeld, of course people would take black scholes, because black sholes overestimates, that is the entire issue with Black Scholes. Put a hot company beta on an options estimation... a beta which is likely influenced by manipulation practices such as brokerages leveraging their inventory of a fairly new issue with shorts (a common occurence) and you've got an astronomical figure which is probably why there is no options trading on new issues. But options expensing has to work for new issues, so black scholes doesn't work. Employees at Google offered black scholes estimate vs options would probably become millionaires right then on the black scholes computation. Kinda defeats the purpose of stock options though!

To: RetiredNow who wrote (64034)	5/15/2003 5:50:08 AM
From: rkral	Respond to of 77400

OT ... mindmeld, I don't see compensation equivalence in your morph. I suggest morphing to: a) cash in the amount of 75% of the Black-Scholes grant value of 100 options, PLUS 25 options, or b) 100 options. While not a very realistic scenario, I agree most people would choose "a". I agree because very few people are risk-tolerant enough to choose "b". A better morph would be a) cash in the amount of 75% of the Black-Scholes grant value of 100 options PLUS 25 options, or b) 100% cash. Would you make the option choice, when 75% of your total compensation is in cash? If no, then what if it's 95% cash? Regards, Ron