Atty, Michael Dell did use treasury stock. He sold the puts to grant the stock to employees. This is very very common. I think it's stupid for a company not to do it.
Porsche makes a lot of money on trading. In fact, so much that analysts actually model their earnings more like a trading company then a car company. GOOG also does this as well.
How so? Michael Dell had a program in place where he granted shares of stock to employees every year. It was in their contract. And he made no secret about what he was doing with analysts. Instead of just paying up for stock, he sold the puts. In many cases he still had to pay up for stock but at least it was partially offset by the put sales.
In lieu of delta1 dilution it's preferable, yeah. But this should not be done for any purpose other than ESOP. The company should not be leveraging long, or short for that matter.
I do agree with atticus, opens too many doors to manipulation and risk. Imagine a wild megalomaniac like Corzine at the controls. I still cast my vote in favor of him being drawn and quartered.
They were not leveraging. How is this different then a company stock buyback which almost every company in America engages in?
In the situation of CALL, if you just read some of their recent press releases, it seems clear that this is a management orchestrated pump and dump. CEO also just sold bunch of shares after a violent pumping process. I would have shorted had not the cost of borrow been over 60% at IB.