Insider Selling Volume at Highest Level Ever Tracked

reply to post by Dance4Life


I stand by my assertion. Obviously you disagree.

Executives who receive large stock options only have upside potential on options and take more risks in order to try and achieve those options. It's a problem when you encourage your leaders of a company to take on more risk than the company should in order for them to hit their option sweet spot.

reply to post by pavil


OK. Here is where the disconnect is happening. By the way I just reread my previous reply, that was more vicious sounding than it needed to be

Anyway, I have been in and subsequently out of this business for quite a while. This is what you are not understanding. I am going to give you an example of why this doesn't matter and why economists remain at schools and not on Wall St. This is also why economists can be continually wrong about most everything under the sun and never catch any flack - because no one values their opinions. You have just been misguided because you haven't been in a professional environment such as this.

Lets say Mr. CEO in your example can exercise these options when his stock hits $10.00 / share. This is why it doesn't matter. There are something called LEAP options. Leap Options These things are basically very long term options that don't expire within a short amount of time. There are all sorts of options now through the CBOE, ones that expire every week even. But in my example LEAP's are important.

I am going to dumb this way down, no offense. Options carry risk, LEAPs carry a different risk than others. But basically what is happening is these options are being decayed over time. There is something called Delta, which is a mathematical term for how much the price will rise for every 1 dollar increase in the underlying stock. And then there is something called Gamma, which is the rate of decay in the delta, referred to as the first derivative. This all comes together in an extremely difficult formula to understand called the Black-Scholes formula. By the way, now you can just use a computer to simulate any scenario on the planet all with 3D graphs of time decay etc. So now that we are all confused let me dumb it way way down.

Basically here is what is going to happen. CEO knows (or his team of financial planners and misfits) how to make this formula work in his advantage. No matter what, in any scenario that could ever statistically happen in the whole world, all the way to infinity he can take advantage of anything that ever takes place regarding his options.

So here is what it all boils down to.

1. Rarely do CEO's from everything I know get actual out of the money call options.

2. It doesn't matter anyway because you can use advanced mathematics at this point and leverage any advantage in the marketplace because you are not paying for this derivative price play in the first place.

3. Lets say CEO doesn't want it public record that he is going about this? He just goes to his best friend the prime broker (take your pick) and makes sure he gets the kickback from such.

4. Rarely does the CEO do much except for talk with the board and break up lines on the conference room table. Yes, I have seen this.

Have a good evening.

reply to post by Dance4Life


Your post still doesn't make me feel any better. Thanks for the reply,Btw. I knew you were in the biz with your posts.

You seem to be basically saying the CEO can fix the "game" regardless of the result, and still have it benefit himself. If he doesn't want to be noticed doing it, he can use other people to get his benefit.

Options are one part of the picture, there are other things that are just as bad.

That

reply to post by pavil


It isn't a "fix" really. It is just hedging. Everyone and anyone should do that in his position because of how unique it is. It is smart to be hedged.

Think of it like this. Lets say you are betting a 6 team parley. Your first 5 teams already win in that parley. At this point it is smart to go the opposite way of your last remaining game so no matter what you make money.

reply to post by HunkaHunka


I did read the post I responded to and disagree entirely with it. Maybe you missed something yourself. Seems to be an epidemic lately. Screw the facts, just blast the poster. Weak.

3 individuals plus myself were buying gold and silver the day I went to the shop. Gold @ $1330/oz did not stop anyone in the store from buying. If gold reaches half of its many predicted highs, people will have wished they bought @ $1300.

The gentleman was selling gold he had purchased in 2003 @ $450/oz. Tripled his investment in 7 years. Not too bad in my book and certainly nothing to blow your nose at Hunka.

reply to post by Oldnslo


The only problem with buying physical gold is the taxation and then the cut you take on the buy/sell depending on the terms.

I really think GLD is the much better play. I haven't seen any decay personally in the ETF and it makes for a much better investment, IMO. That is if you are going to be buying gold here.

Tough call, could go a lot higher and certainly could go a lot lower. You could say that about anything but metals have had a good run as of late. Usually when you pick tops the market makes you look foolish.

www.ocregister.com...

Now (because of Obama's Health Care scam) precious metal dealer can't sell something like $600 worth of gold without reporting it. It was lowered to $3000 previously.

Before you could go to a coin dealer etc and sell less than $3000 worth of bullion at a time without generating a tax. Now you can't even sell a 1 ounce coin. You'll have to sell on the black market or get ripped off.

They can see that you are trying to protect yourself from their (at best)( incompetence. And are moving to close off any avenues of escape.