Patent ID: 7917416

Claim:
A method for protecting the value of compensatory employee options issued to an executive of a company, the employee options being stock options on company stock and having an employee option strike price E, the method comprising: hedging the employee options using a calculation processor that determines the values of call and put options based on market conditions relating to the employee options, the hedging comprising: buying a call option on company stock from the executive on a reference date; selling a first put option on company stock to the executive on the reference date, the first put option having a first put strike price P, the call option having a call strike price C, wherein E≦P≦C, the call option expiring on a settlement date, the first put option expiring on a date no later than the settlement date; determining a second put option strike price that prevents the executive from benefiting from a decline in price of the company stock below E; and buying a second put option on company stock from the executive on the reference date, the second put option having the determined second put option strike price.