Tallmantim, what you say makes sense and there is always the
risk that time decay will eat into the premium. However my expectations are that the options will be well into the money by expiry after the Q2 Phase 1 drilling results as I said in my previous post.
The sp was 11.5 when I bought the options at 4.5. At present there is a constant 3 cent differential between the sp and the options when you add in the 10 cent conversion cost. This difference will gradually reduce as the options approach expiry, however the greatest time decay occurs in the last six weeks because time decay occurs exponentially. In other words the rate of time decay is faster the closer you get to expiry.
If say at expiry the sp is 25 cents I will be well in front even with 100% time decay and worst case my break even is an sp at expiry of 17 cents. (I won't explain the maths here but based on my combination of shares and options and what the prices were when I entered the strategy that is the figure).
So with an sp of >17 I am better off.
Now, who here thinks that the sp will be less than 17 cents by the 28th of Sept after Phase 1 drilling results?
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