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Allen Stock Options Story

George Allen's website has posted some facts addressing (and largely debunking) an AP story on Allen's stock options.

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» Hang Right Politics linked with A Story You Won’t Hear From the MSM

Comments (2)

AP is trying real hard to k... (Below threshold)

AP is trying real hard to keep this story on the front page. Even a nuclear test by North Korea doesn't move it from the top 5 news stories. They're really pathetic.

Here's some dirt on Maria Cantwell that you won't find in the AP headlines. Maria Cantwell was the "other woman" in lobbyist's divorce

I saw the AP hit piece the ... (Below threshold)

I saw the AP hit piece the other day, but immediately recognized it as a "non-scandal."

AP is pushing it either because their reporters, Sharon Theimer and Bob Lewis, and editors are ignorant of what options are, or because they know most of the public is ignorant of them and are trying to deceive.

An option is a temporary instrument, allowing a person to buy stock at a set price on a certain future date. If that "strike price" is lower than the market value on that future date, the option is worth the difference, less the cost of the option itself.

BUT, if the option strike price is HIGHER than the market value of the stock, the option is worth NOTHING. For example: suppose Wizbang! is a public company with stock selling for $50 a share. You buy an option to buy a share next January for today's $50 price. That option costs you $3 (it would be more or less depending on the "volatility" of a stock, how much it tends to bounce around - more volatile stocks would cost more of a premium).

So, if Wizbang! goes up to $60, you exercise your option to buy it at $50, making $10 less the $3 you paid for the option, for a profit of $7 on your $3 investment in only three months! Pretty good, huh?

Except, if Wizbang! stock stayed the same or went down, you wouldn't use your option. There would be no profit to be made, and it would expire worthless. You lose your $3.

This is pretty much the story on Allen's options. Most of them are completely worthless. One has some nominal value (around $1200, I think it said, at current prices). Since he listed all of them once, it can hardly be said he tried to hide his worthless options.

If there is anything to be learned from this story, it is that the Associated Press is not an honest broker of news, but just another water-carrier for the Democratic Party pretending to be a news outlet.




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