Case ID: UV0608
Solution ID: 4995

International Business Machines Corporation Issuer Put Options Case Solution

Case Solution

A brand new ruling through the Investments and Exchange Commission provides the International Business Machines Corporation (IBM) the chance to market put options by itself shares. IBM's assistant treasurer is thinking about the merits of promoting puts with the company's ongoing have to repurchase its very own shares to fulfill the requirements of its Worker Stock Purchase Program (ESPP). The process under review is by using the earnings in the purchase from the puts to counterbalance the cost from the shares repurchased every month for that ESPP. A student must assess the prospect of the Feb 1992 puts finding yourself in the cash and see if the perils of writing puts are sufficiently workable allowing the writing of puts to become viable, lengthy-term strategy.This can be a Darden case study.


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