OCC Trading, page-811

Mate,

This is pretty standard. Study any annual report and you will see an array of executive/employee options and warrants with outsourced parties. I did a thorough review of OCC's options in other posts. We had a massive exerise and forego of options recently.

Those options you discussed were warrants issued to a company along with shares (in a raise) at the bottom of the share price cycle years ago. Those options will effectively be marked as stock in the investing companies modelling, due to the in the money high delta nature. It would be very different if employee stock options. The risk and pricing modelling would be very different.

Many companies offer cash loans for exercise. OCC takes it one further where employees forego some of the options in exchange for a literally cashless exercise - they then don't have to take out massive loans to exercise the options and then typically sell the shares on market. The amount taken up dwarfed this 5 million and was the main reason I did not sell out of my stock earlier in the year - I'd expect a massive sell down by normal methods.

The remainder of the options you discuss are out of the money. The effect of options on the share price depends on a number of things beyond traditional Black and Scholes options modelling, and particularly the availability of a "cashless" exercise facility at the company concerned. Given the mjority of the options are out of the money, employee based and they have cashless exercise, few informed investors, if correctly assessing, would see them as a risk.

You are right to be wary of stock options on many companies (much overlooked) but OCC is not really restrained by outstanding stock options...just a lack of investor investor interest.