Now, however, corporations have to report these potential costs. Before they did not have to do so.
On Mon, Jul 17, 2006 at 09:12:03AM -0700, Jim Devine wrote: > > if I understand correctly, there is no significant out-of-pocket cost > to options for a corporation. An option gives one the ability to buy a > share at a specific price on a specific date. (It's a little like a > claim token at the coat rack at some restaurants.) > > It's when an option is exercised that it has an impact. The person > holding the option can then buy the stock at a low price (pre-set when > the option was issued) and sell it at a high price (the current market > price). Both of these acts can have the impact of lowering the market > price, so that it's the people who own the corporate stock at the time > who lose (a capital loss). It's not really dilution of the stock, > however, since there's no new stock being issued. > -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu
