FIN 550 Discussion Module 8 Financial Options
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Financial Options
I have selected the annual report of Nike, Inc. for the fiscal year ending on May 31, 2022.
The establishment of the corporation occurred in the year 1964, thereafter undergoing a
transformation into Nike, Inc. in 1971. Nike, Inc. is a multinational corporation based in the
United States, specializing in the design, development, manufacturing, and global marketing and
sales of various products including clothes, footwear, accessories, equipment, and services
(NIKE, Inc., 2022). The corporate headquarter of the corporation is situated in Portland, Oregon.
As to the 2022 annual report of Nike, the company effectively employs its Stock
Incentive Plans. The Stock Incentive Plan grants authorization for the issuance of several types
of equity-based compensation, including non-statutory stock options, incentive stock options,
stock appreciation rights, restricted stock, restricted stock units, and performance-based rewards
(NIKE, Inc., 2022). The exercise price of stock options and stock appreciation rights must be
equal to or greater than the fair market value of the underlying shares on the date they are
granted. The administration of the Stock Incentive Plan is carried out by a committee comprised
of members from the Board of Directors (NIKE, Inc., 2022). The committee possesses the
jurisdiction to ascertain the recipients among the personnel who will be bestowed with awards,
the monetary value of said awards, and the additional stipulations and provisions governing the
awards. Shares options and restricted shares are typically awarded by the Company on an annual
basis. The majority of awards granted under the Stock Incentive Plan vest in a proportional
manner over a period of 4 years, contingent upon the employee's continuous employment (NIKE,
Inc., 2022). Additionally, the stock options granted will expire after a period of 10 years from the
date of their initial grant.
According to Nike's 2022 annual statement, the total worth of the company's stock
options amounted to $297 million.
In the scenario of being a retiree from Nike and having received stock as a component of
the pension package benefit, there exist several alternative courses of action that can be pursued
to generate additional income beyond the dividends. An appreciating trend in the company's
stock price would yield favorable outcomes for me since it would enhance the value of the shares
I possess (Duggan, 2019). Additionally, the dividends accrued could be reinvested in the
acquisition of additional shares from the companies distributing dividends, so facilitating the
development of a robust portfolio consisting primarily of equities that offer regular dividend
payments. In the context of retirement, an individual seeking a low-risk avenue for generating
income may consider engaging in the sale of deep out-of-the-money call options that possess
minimal likelihood of being executed (Davis, 2023). An alternative strategy involves engaging in
the sale of covered calls, which enables the generation of profits from pre-existing stock
holdings. The process can be likened to the act of leasing out one's stocks to option buyers, so
generating income in return.
References
Davis, C. (2023, June 23).
Options Trading for Beginners: Strategies for Getting Started
.
NerdWallet.
https://www.nerdwallet.com/article/investing/options-trading-101
Duggan, W. (2019, July 26).
How To Make Money Trading Options After You Retire
. Yahoo
Finance.
https://finance.yahoo.com/news/money-trading-options-retire-152023883.html?
guccounter=1
NIKE, Inc. (2022).
Annual Report
. Www.sec.gov.
https://www.sec.gov/Archives/edgar/data/320187/000032018722000038/nke-
20220531.htm
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0
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2020
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