Comments on: Is it Wrong to Hedge Your Own Company’s Shares?

By: FastSwings

FastSwings — Thu, 04 Mar 2010 20:41:20 +0000

Stock Market Fast Swings from Fastswings.com – March 4, 2010…

Welcome to the March 4, 2010 edition of Stock Market Fast Swings from Fastswings.com. This time around we have 15 articles including an interesting article on hedging your own company’s shar……

By: Darwin's Finance

Darwin's Finance — Tue, 02 Mar 2010 01:53:57 +0000

@Mark Wolfinger, I guess maybe the same reason it was taboo to even investigate Madoff. There are serious financial forces driving the regulatory procedures.

By: Important Reads – End of the Vancouver Olympics Edition | 20s Money

Important Reads – End of the Vancouver Olympics Edition | 20s Money — Mon, 01 Mar 2010 21:57:23 +0000

[...] Is it wrong to hedge your company’s shares? (Darwin) [...]

By: 20smoney

20smoney — Mon, 01 Mar 2010 20:27:22 +0000

Very interesting article. I like it man!

By: tim1198

tim1198 — Mon, 01 Mar 2010 16:26:12 +0000

Darwin:
Of course it’s not wrong for worker bees to hedge our shares. You’re effectively buying an insurance policy. It’s not different than insuring your car or home, and somebody asking “do you know something about your driving skills or house that causes you to insure it?” What’s the difference? I say there’s no difference.

Tim

By: John Olagues

John Olagues — Mon, 01 Mar 2010 16:23:14 +0000

Very good article. Its very good in the sense that it discusses the merits of hedging ESOs as a risk reducing , value enhancing strategy. Hedging has favorable tax consequences that are even better than covered writing of stocks.

I like using listed calls and puts because the OCC is in the middle and the employee has more flexibility to adjust and “tax harvest” with the listed call and puts.

I agree that many executives use every means possible to extract the wealth from the investors and the employees. They don’t backdate any more but they manipulate the stock lower prior to options grants and other methods which border on the illegal.

John Summa and I have written a book , endorsed by some of the most noted experts which addresses many of the same topics.

http://www.wiley.com/WileyCDA/WileyTitle/productCd-0470471921,descCd-description.html

Keep up the good work.

John Olagues

By: Mark Wolfinger

Mark Wolfinger — Mon, 01 Mar 2010 13:27:49 +0000

Trading options is trading with inside information when the trader is a big exec in the company.

Sure, it looks ‘clean’ because it’s a hedge, but unless those insiders are hedged 100% of the time, the prima facie evidence is that they are using inside information to increase their returns.

Why the FEDs don’t jump on this information is beyond me.