Ann: Notification of cessation of securities - ATH, page-2

I’ll confess to knowing nothing about options. I have an idea about what they are, and i’ll try to explain that here, and hopefully someone smarter than i can tell me if i am right or wrong.

My understanding is that options are issued by a company to someone, usually a director or ceo of said company. They issue x number of share for $a.bcd per share and have until such ‘n such a date to exercise (ie buy) those options at said price. Once purchased those options become shares just like any other share. If the options aren’t exercised by such ‘n such a time then they expire and disappear like a fart in the wind. The owner of the options are under no obligation to exercise those options, and can exercise as many of those options as they like up to the number of options issued. Now, if the share price is below the option price then the holder will just buy shares on market because they are cheaper. If the share price is above the option price then the option holder will exercise the options because they are cheaper. They can then sell these share on market immediately for an instant profit. The idea behind issuing options to directors and ceo’s etc is to give them an incentive to get the share price sky high so they can exercise cheap options and then sell expensive shares for a huge personal profit but helping shareholders along the way by an ever increasing share price.

So, am i smarter than what i think, or dumber.?