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Re: May I ask a stupid question?



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Steve,

>From the sound of your post, it sounds like I inadvertantly hit a nerve.
Not my intention at all.

I was only trying to contrast the difference between exchange listed options
and options issued by large corporations.

The fact is, since the mid 1980's with the advent of the ESOP laws,
companies find it very beneficial to issue stock to employees, rather than
giving them  cash. This can take various forms, but I don't think that this
would be the appropriate forum to discuss it in detail, since the last time I
looked this was called "Real Traders."
 
Obviously, the value of any piece of paper will reflect marketplace
conditions.

I know many people who received company sponsored options that are now
worthless.
 

Once again,

All the best that life can offer

:)

Terry Quinn
<HTML><PRE>Subj:	 RE: May I ask a stupid question?
Date:	97-11-18 15:33:21 EST
From:	SteveAn@xxxxxxxxx (Steve Antoch)
To:	TQuinn211@xxxxxxx ('TQuinn211@xxxxxxx')
CC:	realtraders@xxxxxxxxxxxxxxxxxxx ('Realtraders Group')

Terry-

These Incentive Stock Options are commonly given to Engineers at 
software companies, so it's not only the executives that get them 
(though they will get more).
I'm a software engineer, and I've never worked at a software company 
that DIDN'T give them.  Contrary to the myth perpetrated by the 
financial community, engineers are also _very_ interested in profiting 
financially for their work. They obviously do enjoy the pleasure 
associated with solving a tough engineering challenge, etc., but 
that's not the only reason that they work so hard.  Many become 
disgruntled when others make big bucks off of their invention(s).  Why 
should a salesman get more commission for selling 1 copy of their 
software than the engineer who wrote it would get in a year's worth of 
bonuses?  This happened to me, and I left that company because of it. 
  How do you think Microsoft hires away so many good engineers?  Their 
pay _STINKS_ when compared to the rest of the industry.  It is the ISO 
plan that gets so many good engineers in the door.  Hence the large 
number of Microsoft Millionaires.

Steve

BTW, my company's ISO's expire in 10 years.

-----Original Message-----
From:	TQuinn211@xxxxxxx [SMTP:TQuinn211@xxxxxxx]
Sent:	Sunday, November 16, 1997 5:26 PM
To:	@digitalexp.com; realtraders@xxxxxxxxxxxxxx
Subject:	Re: May I ask a stupid question?

Dean,

In regards to your stock option question.

Options that trade on the exchange are very different from the ones 
granted
to senior executives at large corporations.

These type of options allow the holder to purchase stock at a 
predetermined
price and are typically allowed to remain in effect for five to seven 
years
before they expire.
There is usually a holding period of  one to two years before the 
option can
be exercised.

Thus, as an example, having the opportunity to buy 2000 shares of 
Compaq or
Dell Computer at a market price of 3 or four years ago , and being 
allowed to
do that over the last 5 years will quickly turn one into a 
millionaire.

By the way, when the option is granted, the "strike price" is 
typically 15%
below the current market value, so a profit is typically "built" into 
the
option when granted.

In addition,  Brokerage firms have special programs to provide these
executives the  opportunity  to "exercise"  the options without 
putting up
any cash.

As they say in the military,  R.H.I.P.

That is also why they don't need to try and trade their way to riches 
like us
ordinary folks.

All the best
:)

Terry Quinn

P.S.: By the way, remember,  there are only stupid answers, not 
stupid
questions.


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Subject: RE: May I ask a stupid question?
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