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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Tommaso who wrote (110968)	3/23/1999 9:09:00 AM
From: LemurHouse	Read Replies (1) \| Respond to of 176387

"derivative profits (on the sale of puts on DELL and the purchase of calls for stock repurchase) aren't run through theincome statement. They get posted directly to the paid in capital section of equity" "If these puts are still outstanding and were exercised, would that strip the company of capital? I notice that one series of LEAP puts on Dell has an open interest of over 17,000 " This is an excellent question. Does anyone on the thread know the magnitude of our company's current exposure on this issue?

To: Tommaso who wrote (110968)	3/23/1999 11:07:00 AM
From: Chuzzlewit	Respond to of 176387

Tommaso, I am not sure I understand your question. If the put has been exercised it is not outstanding (hence, not part of open interest). I assume you are asking whether the exercise of puts weakens the equity section of the balance sheet. I am not an accountant, so my understanding may not be correct, but I guess that in the case of exercise the accountants would treat the transaction as if it were a stock repurchase. Thus, cash is expended and the stock would become part of treasury. Is there an accountant out there who can help with this issue? If you are asking if it strips the company of cash, the answer is yes. If you are asking whether it weakens equity the answer is a bit more complex because of multiple factors. If a put was written and subsequently exercised at say $35 and the premium Dell received was $2 and the stock is currently trading at $38, it would appear so. But if the stock is selling at $40 a month from now that put transaction would be wise. I think this is really a corporate version of what edamo has been discussing: basically Dell's ongoing commitment to stock repurchases. I hope this answers your question. TTFN, CTC