ASX Today, page-5287

Rubbish. A 2-3 year program does not mean that the SP will remain at 4c for the next 2-3 years... or even through March 2018, which is what it would take for the options to be "destroyed".

It's very simple really. If Ice #2 succeeds, do you think the SP will rise to reflect that?

If the SP rockets all the way to $0.05 - yes 5 cents - the options are worth AT MINIMUM $0.03 (with zero time premium) - because you can always pay the 2c strike price and convert options to heads. (So if you could buy options at 2.9c you would be effectively buying heads at a discount to their trading value)

If (when!) Ice #2 succeeds, do you believe the SP will more likely be significantly north of 5c?

In which case, the options will trade somewhere around whatever the SP is at that time minus 2c. So a SP of 20c, would imply an options price of ~18c.

If options price ever falls below that 2c 'gap', arbitrage traders would happily buy options and convert to heads for literally free money!

Remember that Ice #2 results will be known - and reflected in the SP by around August 2017 - a full 6 months BEFORE the options expire.

Some investors might even perceive that if you buy options now, you gain even more leveraged exposure to an even greater upside than buying heads alone. Really savvy investors might work out that buying a combination of both heads AND options, gives you the ability to convert the options into heads in Feb 2018 if you believe that there is more value still to be unlocked in the future than you can realise by simply selling the options on market - but.... I'll leave that discussion to the savvy investors (you know who you are!)


To be clear - I'm not suggesting anyone should buy options rather than heads - just rebutting the statement that having a 2-3 year program has in any way "destroyed" the value of options.