MTMO, page-18

This discussion around Oppies vs Heads keeps on happening in most stocks that have Oppies, so something not new here.

I feel the bottom line is how much risk one wants to take - that determines whether one should go for Oppies are not.

Saying that to hold Oppies one should have conviction and feel that stock prices will be going up is irrelevant because every holder is holding because they feel the price is going up - whether heads or oppies.

The downside of holding oppies is a few:

• If the heads go down, the oppies will go much more in percentage terms. Eg if heads at 30 oppies 14, if heads go to 20 oppies could go to 5/6 - so heads may lose 33%, oppies 60/70%. And similarly for other ranges. So for some reason if Share Price goes down the loss will be larger than Heads
• The second downside is liquidity. Usually it is very poor. so if you want to get out in a hurry for whatever reason, its not easy to do that. One may be forced to sell much lower if they really want to get out
• The third downside is if for some reason the Heads SP is less than exercise price, then you lose all your money. Eg if MTM stays below 25 at exercise time, one would lose all money.

The upside of holding oppies is

• First is leverage. So if SP is going up, higher returns in Oppies can be made. Eg if Heads may gain 50%, Oppies could 100%
• Second if one wants to hold more shares for future, than one can do by spreading the cost and owning more for now. Eg if Oppies are 40% of Heads, then 2.5 times Head number Oppies can be bought. Rest of the money can be paid by exercise price. Eg if heads 25, Oppies 10 - then 2.5 Oppies can be bought compared to Heads

Finally what should one do:

• I think its individual risk/reward - how much a person is ready to lose money in order to make a greater gain.
• Oppies always look very juicy and many people buy it because they believe that SP is going to go very high (all holders think that). Unfortunately it does not happen that way in many case.
• My experience is that roughly 70 to 80%(or may be more) of oppies expire worthless and those oppie holders lose all their money. At the time of buy it does not look like, but sadly that's the rough stat (I am no authority but the study I have done, so I could be wrong). Look at the data below of Oppies expiring in next few weeks, that will give a picture. Most holders would not have realised or wanted this to happen, but it does.

Data of oppies expiring in next few weeks:

• It shows that only 2 of 18 Oppies are in money and rest 16 will expire worthless and oppie holders will lose money.
• Its not a selective list, I have just picked up all oppies expiring in next few weeks from a site who claim they may be 100% right, but I have found it reliable.
• So just a caution and understand risk based on stats.
• There can be a lot of money made by holding oppies but one has to understand the risk and hope for SP to go higher.
• Personally I always keep a mix but am always wary of Oppies - reason when SP starts falling, the downside impacts are much longer, so try to get out immediately from oppies because they take a big hit.
• But when SP is going up, very good chance to make a higher percentage gain.

All these are my thoughts, I am no expert, I could be completely wrong, so please dyor and risk/reward.