MTJBKH: I formerly held stock in 3Com, which for a short period tried trading options on the company stock. As noted below from their 2001 10-k report, after having to take a $140.7 million hit to settle a sale of puts, they gave up. I think IDCC has enough to be concerned about without taking on option trading.
"In fiscal 2001, 3Com initiated a program of selling put options and purchasing call options on its common stock. These were "European" style options which, in the case of put options, entitle the holders to sell shares of 3Com common stock to 3Com on the expiration dates at specified prices and, in the case of call options, entitle 3Com to purchase its common stock on the expiration dates at specified prices. The option contracts gave 3Com the choice of net cash settlement or physical settlement or net settlement in its own shares of common stock. These options were accounted for as permanent equity instruments. During fiscal 2001, 1.2 million shares of common stock were repurchased through exercised puts for a cumulative purchase price of $19.9 million. The option contracts contained per share price floors, whereby a drop in the price of 3Com common stock below such price floor could require accelerated settlement of the put options by 3Com. Due to a decline in the price of 3Com common stock, accelerated settlement of the remaining put options was required. 3Com elected net cash settlement of 15.3 million put options outstanding, and related call options, which was recorded as a reduction of share capital in the amount of $140.7 million. As of June 1, 2001, there were no put options or call options outstanding."
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