EFTA02368723

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From: Steven Sinofsky Sent: Friday, September 12, 2014 9:35 PM To: jeffrey E. Subject: Re: MSFT risk reduction ok thanks. I'm east saturday then west sunday after 3p=. On Fri, S=p 12, 2014 at 2:33 PM, jeffrey E. <[email protected] <mailto:[email protected]» wrote: dumb, 4,=A0 lets talk over the weekend On Fri, Sep 12, 2014 at 4:23 PM, Steven Sinofsky «mailto > wrote: What do you think of this approach? 547,515 shares with a cos= basis of about 27.50 averaged Forwarded message <mailto Date: Fri, Sep 12, 2014 =t 12:12 PM Subject: MSFT risk reduction To: Steven Sinofsky < Cc: "Irwin, Don X" >, "Dunn, Ashl=y P" We investigated quite a few strategies for h=dging your MSFT position given your input/preferences. These strateg=es included (but were not limited to) the following: Long Put A 1 year put option (90% of spot price) cost=about 5.8% out of pocket and a 1 year option 80% of spot still required ar=und 3.15%. This seemed expensive to us so we looked for ways to cheapen the cost. EFTA_R1_01367935 EFTA02368723 Put Spread Collar Selling a 110% call option to help finance a=90% put option results in a more amenable 2.45% out of pocket cost. =f you were to sell a put to help fully offset the cost of purchasing the 90% put, =he put strike would have to be set at 83%. That limits the total dow=side protection to only 7% while fully capping upside after 110%. Ag=in, this tradeoff seemed less than amenable. Laddered Strategy After pricing