myg options letter, page-10

Did a quick sensitivity analysis (given i'm trying to work and i can't get the issue of whether i should enter this options today - bpay deadline, or i may already miss it given one day processing isn't alot).

SP to 7c SP to 8C
0.07 0.08 0.09
336 456 576
Options value: 500 1000 1500
164 544 924


Basiaclly worked out 12,000 shares /heads sold at 4.2c now to gain the minimum $500 required for options. Each 1c above 6c breakeven point (purchase + 5c strike price) adds $500 profit basically.

So I worked out what was the foregone value of the rise in heads versus what you would receive due to the options being in the money. at 7c a share, 12,000 heads would have made back $336 (in losses in my case), options would have made $500, so net difference/gain by using options is $164. Likewise at 8c the heads makes $456 back from the rise from 4.2c to 8c, and the options $1,000 - meaning $544 net gain using options. And vice versa.

Obviously this strategy works better if you a) believe in options as the company will get back up to the 7c + mark , i.e. get finance, or get the iron ore projects up etc.

If the company a) falls further, or the share price goes up to below 6c (breakeven options price) then obviously you gain nothing on options but could have sold those heads at a higher price.

Just thought i'd share. would think if there were solid financing on the table the sure win would be taking the options. apparently not ?1.5 hours to lunch.. and 2.5 hrs to decide on bpay!