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

To: ptanner who wrote (177824)	5/6/2004 11:40:59 PM
From: Elmer Phud	Respond to of 186894

ptanner - You raise some good points but I'm going to concentrate on this one. I think the valuation method for the cost at exercise would be simply: market price - exercise price. There surely is a clear means by which a company can determine the appropriate amount for their taxes? This raises problems. Using Intel as an example, assume Intel buys X shares on the open market at $Y and at the same time grants X options to employees at $Y. At some time in the future the share price appreciates to $Z where Z>Y. The employees exercise their options and buy X shares at $Y. Has Intel suffered a loss even though the share price has appreciated? I say no. If I buy Intel at $26, sell a CC at $30 for a premium of $0.35 and Intel goes up to $35 before the expiration and someone exercises it, have I lost $9 (minus the premium)? That's what you're saying.