Go to Jeff Salisbury LWGate Home Page.From: "Tom Worley" <stkguru@bellsouth.net>
Subject: Re: [CANSLIM] USLB
Date: Fri, 3 May 2002 08:44:04 -0400
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thanks, Robert, good presentation I must point out, to avoid any confusion, that this discussion started because I pointed out that Management owns 70% of the issue according to DGO. However, their chart for the past year does not show any insider selling, so this is all theoretical at this point. While I would totally expect them to exercise any expiring options, and sell the acquired shares for exactly the reasons laid out so well by Robert below, I see no evidence so far of a mass exodus from the stock by the insiders. Tom Worley stkguru@bellsouth.net AIM: TexWorley - ----- Original Message ----- From: "Robert Gammon" <rgammon51@yahoo.com> To: <canslim@lists.xmission.com> Sent: Friday, May 03, 2002 8:09 AM Subject: Re: [CANSLIM] USLB OOPS, I math challenged myself, this should be TWO (2) stock splits later. Robert On Fri, 03 May 2002 07:06:22 -0500 (CDT), Robert Gammon wrote: >Jans, > A specific example might be as follows > > As a mid to upper level manager, you are granted options to buy the company stock at >current market price. The options expire in 10 years. You are getting options on 1,000 >share per year at a strike price of $25. > > Fast forward to 2002, 9 1/2 years after you were granted the options. The current market >price is $50, and the stock has split 3 times along the way. Your 1,000 shares are now >4,000 shares and the strike price on the option is $3.13. Faced with getting or losing >those profits, wouldn't you be exercising and selling the shares??? For the math >challenged among us, thats nearly $187,500 before commissions and taxes and all I had to do >was hang on. Most in this position don't merely hang on, they continue their outstanding >job performance and the options get larger each year. > >I picked a relatively mild example. something for a middle manager. For the top 5 to 10 >individuals, multiply the numbers by 10 to 50. To the recipient, this is 'free' money. >Greater than 90% exercise for cash (i.e. sell the shares immediately) > >If you exercise and hold, you MUST come up with the cash for the purchase (4000 * $3.125 = >$12,500) PLUS the tax on the imputed gain (187,500 * 35% = $65,625) or about $78,000 >So, I PAY $78,000 or I RECEIVE $121,875 (after taxes)??? I already have over 75% of my >total net worth tied up in the company stock, and you want me to ADD to the position???? >I'll take the cash, thank you very much. > >Robert > >On Thu, 2 May 2002 22:01:12 -0400, Tom Worley wrote: > >>Tom: >> >> As I understand it, "in the money options" mean that the options are >>higher than the striking price. And deep in the money-I presume-would mean >>that the options are a lot higher than the striking price. >> >> If this is so, and the options are about to expire, than why don't the >>option-owners exercise them (ie. sell them)? >> >>jans >> >> >> >>In a message dated 5/2/2002 8:53:33 PM Eastern Daylight Time, >>stkguru@bellsouth.net writes: >> >><< Why would an insider sell if he thinks things are going great and will >>get >> better? Because often their entire net worth is tied up in one company, and >> they need to diversify. Also, they may have options about to expire that >>are >> deep in the money. Can't just exercise the options, need to sell stock to >> pay the immediately due tax bill. >> >> >>- >>-To subscribe/unsubscribe, email "majordomo@xmission.com" >>-In the email body, write "subscribe canslim" or >>-"unsubscribe canslim". Do not use quotes in your email. >> >> >> >> >>- >>-To subscribe/unsubscribe, email "majordomo@xmission.com" >>-In the email body, write "subscribe canslim" or >>-"unsubscribe canslim". Do not use quotes in your email. > > > >- >-To subscribe/unsubscribe, email "majordomo@xmission.com" >-In the email body, write "subscribe canslim" or >-"unsubscribe canslim". Do not use quotes in your email. - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email.
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