Discussion in 'Trading' started by crgarcia, Dec 26, 2007.
Since most options expire worthless?
A company cannot issue options on their stock. Not "tradeable" options. They "can" issue warrants and options, and do so to their employees (primarily). Exchange traded option listing is up to exchanges.
As Don mentioned, those are not the same options.
I have been wondering about something related. Can a company trade its own exchange traded options?
I am sure you can't load up on your own puts and stop working, but what rule or mechanism prevents a company from doing this? What does the CFO tell the new guy in the office who proposes the idea after he stops laughing?
I suppose that is a legal prohibition, not technical infeasibility, since it is clearly doable?
I have a vague recollection of DELL doing this a few years ago, selling options (on an options exchange). Can't remember if they were calls or puts but I think they did well for awhile until they got creamed (like many option sellers).
Same disclosure rules apply (stock ownership) to the Company's officers and other employees.
Don- Thanks for the repy. But I actually meant why can't the company trade in its own options in the company's account, like the way they do stock buybacks.
I recall hearing that MSFT had made money selling puts as part of a buyback program. Not sure if it was true or not, but made good sense as a way to make extra profits at the same time as buying back sharres when the price dropped.
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