Companies make some extra money by issuing options on their stock?

Discussion in 'Trading' started by crgarcia, Dec 26, 2007.

  1. One example could be Steve Jobs planning to leave Apple and only his closest friends and family are aware of it and they gradually load up on puts. When it was announced that Jobs had pancreatic cancer (2004) AAPL did take a small hit and it was reported that as much as 25%* of Apples worth is tied up in Steve Jobs.

    * I'm not sure the exact percentage but it was very high.
     
    #11     Dec 27, 2007
  2. That's what I meant by full disclosure. The company can't simply buy and sell their own stock without full disclosure.

    All the best,

    Don
     
    #12     Dec 27, 2007
  3. gnome

    gnome

    That would be "trading on material, non-public information"... and would be illegal.
     
    #13     Dec 27, 2007
  4. ET70424

    ET70424

    Thanks. You just refreshed my memory. That's what I remember also. MSFT did that for many years while its stock was on a bull run and made a ton of money from the MSFT puts they regularly sold that expired worthless, as I recall the news report.

    Assuming that to be factual, which I have no reason to doubt, then there is (or at least was) no legal prohibition against a company selling options (or at least puts) of its own common stock.

    Regards.
     
    #14     Dec 27, 2007