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To: Lurker7 who wrote (205222)	7/13/2006 2:25:43 AM
From: Petz	Respond to of 275872

An early article I read on the option timing charges printed some statistical nonsense. The article claimed that if the option pricing was fair, that the option prices would be close to the average stock price for the period from six months before to six months after the option award date. That is simply not true. A company is much more likely to issue its options if the stock is trading below the median price of the prior six months, and they have every right to do so. And since stock prices of many tech companies have positive long term growth trends of perhaps 20% per year, it is likely that such a tech company's option exercise price will be 10% below the average price for the next six months. I am not saying that some companies did not cheat; undoubtedly they did. But the widespread occurence of option exercise prices that are below the median for the 12 months period starting six months before the award date proves absolutely nothing about the existence of widespread cheating. Petz