RE:RE:Not Only Revenue Generating News Could Help The PriceMarkhamjohn wrote:
Maybe someone with options exerience could help me understand this. If an executive has 19 cent options he wouldn't exercise them when the current price is 19 cents - right? Because he/she could but on the open market at the same price and save the options for later. And unless the executive was going to buy and then do a quick sale why would they exercise an option now even if they believed the stock was going to increase to their desired selling price? Exercising now would make them pay for the shares now and tie up cash while the share value climbed. Wouldn't they just wait until the stock got to their selling price and then exercise the option and sell the stock on the same day, therefore not have to tie up any cash? This would also protect them against the stock falling instead of climbing. So please fill me in if my thinking is wrong, but otherwise I don't see any message if the executives do not exercise the options now.
The options are an incentive for the insiders to get the stock price higher. The options are at 19 cents and will not be exercised untill the share price is much higher. No insider in their right mind would exercise their options at the same price that those options were given. It makes absolutely no sense. Instead you would publically aquire shares in the open market at these low prices if you believe the stock will move higher and save your options for later. This is what Ryu has done.
So how do the options work?
If the stock price gets to a dollar then an insider may decide to excercise their option of buying stock at 19 cents and selling it at $1.00. As you can see that's not a bad incentive to see the stock price rise and to work the hours needed to get that stock up to that higher price. The insider can purchase the stock share at about 1/5 the price and make five times their money on the sell of their options. Now any retail investor that bought the stock at 19 cents right now can also do that at $1.00 too. The only difference is the insider doesn't have to buy the stock right now they have the "option" to buy it later after the share price has moved up, where as the retail investor would need to buy the stock now. So the other advantage of this for the insider is they don't need to have the money right now to buy the stock. They can buy later at 19 cents through their options even if the stock is priced much higher at lets say... $2.00. So now you can see why no insider would exercise their 19 cent options when the stock is 19 cents.