Biotech Values

[iwfal]

Exercise and hold is an odd thing to do under most circumstances. For instance, under these circumstances (exercising options with a strike price of less than 1 and exercise price of 15) he'll have to pay somewhere in the neighborhood of $200K of AMT. If he had, instead, invested it in MNTA shares and left the options untouched he'd actually make more money assuming the stock goes up.

I fully agree that there is some psychology going on that makes these strategies attractive - but not sure exactly what it is.

(And note that I am aware that there are special circumstances where this strategy (exercise and hold) is economically attractive. E.g. for whatever reason the option holder expects to have the cash to pay AMT but doesn't have it at this instant. Or the option holder has low enough income to avoid AMT or expects to be below AMT amounts in a few years (and so can recover some of the money paid in AMT). BUT in most circumstances it doesn't make a lot of obvious sense.)