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

To: Amy J who wrote (67317)3/10/2005 10:58:49 AM
From: GVTucker  Respond to of 77400
 
Amy, RE: Either Cisco is expecting their stock to go lower, or Cisco has already lowered the amount of options granted.

The later case is much more likely.

The former case is pretty much impossible. Expected stock price performance is not a factor in Black-Scholes.



To: Amy J who wrote (67317)3/10/2005 11:11:10 AM
From: rkral  Respond to of 77400
 
Amy J, re "Either Cisco is expecting their stock to go lower, or Cisco has already lowered the amount of options granted."

No, the decrease in fair value -- of fiscal 2005 options relative to 2004 -- is about 90% due to the decrease in estimated option life ... as I explained.

If you doubt it, just get the numbers from Cisco's 10-K and 10-Q ... and plug them into a Black-Scholes option calculator for yourself.

Ron


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