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No. of Recommendations: 1
Sorry if I'm so dimwitted on this, but it sounds like you are using the 2000 option cost as a proxy for the cost in 2001. Is this a fair statement?

Well, it depends. If you are one who likes to use trailing P/Es for some reason or another, then you are not necessarily using it as a proxy for 2001 earnings, but for the whatever reason you're using 2000 earnings in the first place (perhaps as a proxy for perpetual, normalized earnings). If you were doing a DCF or a forward P/E, you'd be using the previous year's numbers as a baseline (rather than a proxy) for predicting the future number.

fwiw - I use ev/e in my main spreadsheet but do it because 1) I already know it double counts the earnings and 2) because the next quarter will include more interest.

I am not on board with reason #2. I don't think the fact that interest will increase makes EV/E a helpful metric. EV/E will double count interest costs or benefits, and cause problems in valuing companies with significant cash or debt. Here's a prior post on my opinion:

http://boards.fool.com/Message.asp?mid=12310909&sort=recommendations

By the way, WEB's 1/3 x strike price x number of options is a proxy for figure the annual option cost, right? Not a cumulative cost?

Right (annual).
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