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To: rkral who wrote (178443)	6/29/2004 12:47:17 AM
From: Ali Chen	Read Replies (2) \| Respond to of 186894

Ron, "True, an option by itself cannot be a covered call, but you misunderstand. By granting options, the company is clearly a call writer. By also repurchasing shares, the company is clearly acting similar to either a naked-call or covered-call writer. The economic consequences of the two choices is clearly different. The choice doesn't, and shouldn't, impact the income statement ... as "selling" options and selling stock are financing activities, not operating ones. But the choice can certainly impact the cash flow statement, the balance sheet, and shareholders' equity per share." Since I am really out of my league in this field of options trading, I have nothing to say except when you "selling for free" options to your worker as a part of compensation for his labor, this activity becomes operating, not just financing. "I've twice recently stated that IMO opportunity cost is an economic concept, and not an accounting one." From your wording it sounds like you still maintain that the difference between current FMV and option exercise price is still an "opportunity cost", but just the concept is irrelevant to accounting in general. Could you please point out what other opportunity was missed between an employer-grantor, and his employee-grantee? Cheers, - Ali