Question

why is the best strategy for employer stock options sometimes to hold until "the last minute"...

why is the best strategy for employer stock options sometimes to hold until "the last minute" rather than to exercise early
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

For most people stock options are an addition to their base compensation and an opportunity to profit if the company does well. Yet each year, it is estimated that more than 10% of in the money options expire unexercised. Some other mistakes options owners make include selling vested shares early and missing out on future appreciation, not taking action to protest gains when options have appreciated in value, waiting until the last minute and exercising options at expiration, failing to plan for taxes until they are due, and not considering risk and portfolio diversification issues.

Also, it is best because the persons gets to know the strategy which will affect in the stock otion and also to clarify the problems and tooking up the best strategy.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Use the following stock and set of options to answer #1, # 2, and #3 below....
Use the following stock and set of options to answer #1, # 2, and #3 below. A stock, priced at $47.00, has 3-month call and put options with exercise prices of $45 and $50. The current market prices of these options are given by the following: Exercise Price Call Put 45 $4.50 $2.20 50 $2.15 $4.80 1.   Assume that you feel that it is likely that the stock price will move up only very modestly over the next 3 months....
When regarding stocks, why are put options sometimes better than call options, and other times it's...
When regarding stocks, why are put options sometimes better than call options, and other times it's the reverse. How can investors make money while using either a put or a call options?
Yallow Company's stock is trading at $30 a share. Call options on the company's stock are...
Yallow Company's stock is trading at $30 a share. Call options on the company's stock are also available, one with a strike price of $25 and one with a strike price of $35. Both options expire in three months. Which of the following best describes the value of these options? If Yallow's stock price rose by $5, the exercise value of the options with the $25 strike price would also increase by $5. The options with the $25 strike price...
Explain how each trader would set up a strategy to carry out their intended purpose. Be...
Explain how each trader would set up a strategy to carry out their intended purpose. Be as specific as possible in each case, by providing details about the strategy: the position (whether long or short), the size of the exposure (notional amount), the number of contracts involved (if more than one), the expiration date of the contracts, etc. In each case, explain whether the trader will realize a profit or a loss if the underlying asset/variable increases by 10%. An...
What Is Strategy and Why Is It Important? A creative, distinctive strategy that sets a company...
What Is Strategy and Why Is It Important? A creative, distinctive strategy that sets a company apart from rivals and provides a competitive advantage is a company’s reliable ticket to above-average profits. Illustration Capsule 1.1 discusses how Apple’s strategy led to its becoming one of the most profitable companies in the world, with revenues of more than $225 billion. It’s reputation for superior technological innovation and design capabilities has made its products and services the most popular in the world....
State if you agree or disagree with the summary below and why? Until taking this course,...
State if you agree or disagree with the summary below and why? Until taking this course, I truly never thought about budgets, besides my own. From this course, I learned how complex budgets truly are. I think it is important for residents to get involved in public budgets, when allowed and when residents truly understand the tradeoffs. Public residents may be able to get engaged by possible online polls, telephone surveys, town hall meetings, or community events. I believe it...
Why, exactly, would Gaddafi have resorted to the printing press in early 2011? Info People sometimes...
Why, exactly, would Gaddafi have resorted to the printing press in early 2011? Info People sometimes talk about profitable companies as having a “license to print money.” Well, the British firm De La Rue actually does. In 1930, De La Rue, printer of items such as postage stamps, expanded into the money-printing business, producing banknotes for the then-government of China. Today it is the largest manufacturer of banknotes, producing the currencies of about 150 countries, from the United Kingdom to...
1. Why do we use percentage returns rather than dollar returns when we compare returns? 2....
1. Why do we use percentage returns rather than dollar returns when we compare returns? 2. Last year your portfolio made 15%; the stock market made 10%, and the risk free rate was 2%. If the CAPM is correct, what must the beta of your portfolio be? 3. The world can change but basic financial math doesn’t. The obvious decreases in future cash flows from the virus is bringing stocks down. What is the other, probably more important factor driving...
Stock Market Valuation and Success - IPO An initial public offering (IPO) is the very first...
Stock Market Valuation and Success - IPO An initial public offering (IPO) is the very first sale of stock that is issued by a company to the public (Hayes, n.d.). Until a company's stock is offered for sale to the public, they are unable to invest in it. A reason for a company to go public is to raise a large amount of money for the company in order to grow and expand. The IPO options raises the largest sums...
troduction The following document contains a series of questions relating to content that has been, or...
troduction The following document contains a series of questions relating to content that has been, or will be, discussed in class. Please be aware that, on first assignment, not everything contained in this problem set will have been addressed directly in class. However, all content will be addressed by the time this problem set is due. With that said, it would be a good idea to work on the problems over the course of their assigned period, completing questions relating...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT