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Strategies & Market Trends : Good Investment Theses: VALUATIONS w/ FUNDAMENTAL ANALYSIS -- Ignore unavailable to you. Want to Upgrade?

To: Chuzzlewit who wrote (131)	4/28/1999 2:43:00 AM
From: jbn3	Read Replies (1) \| Respond to of 160

Chuz, My point was that a company COULD price ESOs to be non-dilutive thusly IF... The current stock price is $50 The LEAP premium is $20 The Opportunity cost is $2.05 (at 5%) The LEAP strike is $50 An ESO granted at an exercise price of $75 would be > = $20. (Premium Paid by company for LEAP) + 2.05 (Opportunity Cost @ 5%) + 50.00 (Strike Exercise Price of LEAP) =============================================== = $72.05 This example would leave $2.95/share for brokerage and handling. I DO understand that most companies do NOT grant ESO's that are that far out of the money. But we are speaking hypothetically. In this example, the company stands to actually make a bit on its ESO transactions if the stock does well. Anyhow, that was my $0.02..... will leave it up to you financial wizards from here on out. jbn3