NVIDIA Q4: Ouch! $481M revenue, <30% margins

[PurplePigeon]

To my inexperienced investor's eye, the offer to buyback options from employees looks moderately generous, especially when you look at the cost on the open market to buy call options.

According to yahoo finance, Jan 2011 $25.00 call options have a bid/ask of 0.35/0.50. Maybe if you were an nVidia employee, you would take the company on their offer and just buy calls.

 

[silent_guy]

To my inexperienced investor's eye, the offer to buyback options from employees looks moderately generous, especially when you look at the cost on the open market to buy call options.

According to yahoo finance, Jan 2011 $25.00 call options have a bid/ask of 0.35/0.50. Maybe if you were an nVidia employee, you would take the company on their offer and just buy calls.

This is not really a surprise. If a company offers to buy-back stock options for whatever reason, they have to be at least a bit above the Black-Scholes price, otherwise it isn't much of an incentive for employees to accept them (they have Excel spreadsheets too. )

Most companies prohibit employees from buying open market options of their own company's stock. (Especially puts, to the chagrin of many during the dot-com bubble, when it would have been a great way to lock in outsized profits on unvested call options.)

Anyway, whether or not it's smart to use cash on such a buyback is another question. 5 years back, with options not having an accounting cost, companies would just have repriced them to a lower level. A much better deal for employees and the company itself. Less so for stock holders...