Some of these backdating practices are associated with ISOs that are in-the-money option
grants worth a strike price below market value.
31) Conceptually, an in-the-money option
might still be considered performance-based because its value depends on maintaining the stock price above a certain number.
If a stock transaction would have created a constructive sale, the in-the-money option
will also create a constructive sale.
The extra $5 million received then goes to the investment banker to settle the in-the-money option
that the corporation had previously been short.
50 yesterday, it appears that most of the activity surrounding the in-the-money option
consisted of widespread profit-taking.
Open interest for this in-the-money option
comes in at 20,312 contracts, making it the site of peak front-month call open interest.
A market participant holding an in-the-money option
will receive a position in the December futures contract.
In addition, each outstanding in-the-money option
to purchase shares of Castelle was converted into the right to receive the excess, if any, of the per share purchase price ($4.
The in-the-money option
has seen heavy trading all day, but the bulk of today's volume crossed in two blocks of 10,000 contracts around 9:44 a.
This factor suggests that these could be new positions, but there are already 5,743 open contacts on this newly in-the-money option
, so they could be liquidations as these speculators seek to collect profits.
At the time we pulled our numbers, this in-the-money option
had seen more than 22,000 contracts trade on an option that, heretofore, had open interest of fewer than 3,700 contracts.
Open interest at this in-the-money option
rose from 29,631 to 43,992 contracts, as blocks of 2,978 and 7,430 contracts crossed the tape at 1.