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

To: RetiredNow who wrote (67958)5/22/2005 7:26:40 AM
From: rkral  Respond to of 77400
 
mindmeld, re "Black Scholes will assign value to an option, even if it is out of the money. "

Correct.

re "As such, out of the money options are still dilutive to EPS."

Incorrect, since Black-Scholes does not affect the denominator of a "diluted EPS" calculation.

However, Black-Scholes will (likely) be used to determine Cisco's option expense, decreasing reported net income, which affects the numerator of EPS calculations. But that's not dilution.

Ron


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