To understand why stock options still hold such powerful sway in Silicon Valley, despite the savage bear market, you need only listen to Mr Mark Hamilton.

The Sun Microsystems manager once made big profits cashing in options, using the money for a down-payment on a house and donations to his children's school. Sun's shares are now more than 90 per cent from their peak, rendering many of his remaining options worthless - although he has new options with a strike price of as little as $3 or so.

Yet the battering taken by Sun's shares has not dented his optimism. "People think, 'Gee, it won't take a lot for $3 Sun stock to go up to $6, and I double my money'."

The Valley's dreams of overnight riches refuse to die. The faithful still believe in a rebound, even though the tide of personal wealth created by the bull market has receded.

The extent of the decline is evident from calculations of employees' option profits at 10 of the biggest US technology companies, compiled by the Financial Times and endorsed by some of the companies.

These indicate that, on average, tech company workers' capital gains from options last year were about only a fifth of the figure two years before.

Given the extent of the collapse in tech shares over the past three years, however, it may come as a surprise that workers at some companies are still raking in so much.

At the peak of the boom, for instance, Microsoft employees made more than $16 billion (€14.7 billion) in option gains - an average of $416,000 for each of the company's 39,100 employees at the time.

Yet even last year, despite a big fall in the company's shares, they made nearly $5 billion - about $90,000 per worker.

Few others have been so fortunate. Cisco Systems, Hewlett-Packard and Sun workers last year made less than a tenth of the capital gains they saw two years before. At HP, those profits amounted to less than $700 per worker. Cisco's employees, who made an average of $230,000 each in 2000, saw option gains on paper of only $14,000 each last year.

The averages do not reflect senior executives' disproportionate share of the profits, but the tech industry at least has a tradition of spreading its option wealth more widely than most. Sun, for instance, says it has handed 87 per cent of its options to workers below the rank of vice-president over the past five years, a pattern also seen at Intel.

The FT calculations are based on disclosures by the companies of the number of options exercised each year, along with the average strike price. They assume workers exercised options evenly over the year in question, yielding a paper profit based on the company's average share price during the year. They do not reflect whether those paper profits were cashed in.

The reduction in these options profits has had some far-reaching effects. The loss of capital gains income from stocks, some related to employee options, helps explain the depth of California's fiscal crisis.

The tech companies have also suffered, as their cashflow was boosted by the options bonanza, because they could claim a tax credit based on their employees' capital gains. Yet in companies that made stock options such a powerful feature of the bubble years, the options culture seems surprisingly untarnished.

True, there have been signs of a retreat. Under investor pressure, chief executives such as Mr Tom Siebel at Siebel Systems and Mr John Chambers at Cisco have given up some personal option holdings. Outsiders, also, have questioned the Valley's addiction to lavish stock awards; Mr Terry Semel, the Hollywood executive in charge of Yahoo, suggested that mature tech companies should rely less on handing out stock and more on traditional forms of compensation.

But Mr Bruce Chizen, chief executive of software house Adobe, maintains the bear market has made no difference to the attractions of options as an incentive. However, he says: "If shareholders want us to issue less stock, we'll step back and look at other forms of compensation."

To many in Silicon Valley, options have become almost an article of faith, a symbol of the differences that make workers in the heart of the tech industry feel they are not just normal working drones.

Ms Jan Parcel, a Sun engineer, says she has never made any money from the company's stock, and all her options are under water - strike prices are higher than the current market price. She is not alone; more than 80 per cent of Sun employee options are out of the money. But that does not dent her insistence that they are an essential part of the company's culture.

"It's the whole thing of putting my heart and creativity into the job. It really would be depressing to get up in the morning and think you were doing it just to make someone else wealthy."