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

To: Elmer Phud who wrote (177856)	5/8/2004 11:21:14 AM
From: rkral	Read Replies (1) \| Respond to of 186894

OT .. elmerp, re "Surely [ed: option] value does not spontaneously come into being from out of nothingness." Quite true. In simplistic terms, the value is based on the terms of the options contract, an option contract which does not exist until written and signed. So the contract can be said to "come from out of nothingness." But the value does not "come from out of nothingness". The option value comes from the obligation to potentially transfer partial ownership of the company .. from existing shareholders .. to employees. Ron

To: Elmer Phud who wrote (177856)	5/8/2004 9:08:06 PM
From: williamlp	Read Replies (1) \| Respond to of 186894

elmerp: I think you are avoiding the question. If the option has value (which I don't dispute) after giving it away then it must have had value before giving it away as well. Otherwise how can you suffer a loss on something that didn't exist? Surely value does not spontaneously come into being from out of nothingness. So where on the balance sheet does Intel record the value of unissued options? This isn't any more mystifying than borrowing money and paying someone with it. Where was the money on my balance sheet before I borrowed it (and took on the obligation to pay back) and gave it away? If I wrote an option contract and kept it myself, which of course would be pretty silly, I could represent the two pieces on my balance sheet: The value of the option I hold, and the obligation to pay, which net to zero. If I give away the positive part, clearly my net assets have changed. That's pretty much the definition of what "expense" is in a sensible universe, isn't it, a decrease in net assets? (If I have stock, the fact that its upside is capped reduces its present value.) Would you be willing to to sell me options at half market value?