Gooptions: A Bearish Signal For Google Stock?

Google (GOOG) has announced Gooptions, an experiment in making a market in non-executive Google employees' vested stock options. The upshot: This will make it easier for Google to internally account for option costs [via a market vs. Black-Scholes], while potentially creating a new avenue for employees selling options.

My main beef is the apparent absence of transparency. Unless I misunderstand the announcement and the myriad related financial documents [1, 2, 3], institutions are about to get a privileged window into Google employee's option-selling plans. A secondary issue, and this is more debatable, is you could argue this is a bearish signal for Google stock. After all, if you think the upside for GOOG is limitless then you could hardly be coerced into selling your stock prematurely via an option market.

GOOG 1-yr chart

Comments

[Zack Miller:]

Interesting points about the lack of transparency. On the other hand, I don't necessarily think it's bearish on the stock. Given the fact that they will be sold through an exchange, huge premiums may be paid for these things. It may just be a case of monetizing now versus later. Call it a "Google Viatical"!

2006 Dec 13 09:08 AM