International Business Machines Corporation: Issuer Put Options Harvard Case Solution & Analysis

The new regulation by the Securities and Exchange Commission has given the corporation International Business Machines (IBM) to sell options on its own shares. Assistant Treasurer of IBM is considering ways of selling advantages, combined with the constant needs of the company to buy back its own shares, to meet the needs of its employees stock purchase program (ESPP). The strategy considered is to use proceeds from the sale of puts to offset the cost of shares purchased each month for the ESPP. The student must assess the probability of being in February 1992 put the money and determine whether the risk of writing a fairly manageable way to allow the writing of puts to be a viable long term strategy.
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by Jordan Posell, Kenneth Eades Source: Darden School of Business 14 pages. Publication Date: September 29, 1992. Prod. #: UV0608-PDF-ENG

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