options vs heads, page-3

I thought we'd beaten this subject to death, but there's so many avb threads that I guess it's too hard to find.

Specifically for AVBOB, I see no negatives. What I hate about conversion is the time that it takes which can be a week or 2 during which you cannot sell your stock if the market moves suddenly, but if you're considering long term that is not an issue.

Always be aware of the expiry date and conversion price.

At 1.5c exercise price, AVBOB is trading at a discount to AVB, so is currently the cheaper entry.

More generally and mostly not applicable to AVB/AVBOB, the negatives of options can be:
- liquidity, heads are more liquid and options can be very illiquid sometimes
- options are not eligible for capital raisings, eg rights, SPPs etc
- options don't always end up in the money so if the head stock is not worth more than the exercise price nearing the expiry date, the options will become worthless

The big plus for options is the leverage. The tend to move with the heads so, for example, a 2c gain will be higher in % terms for the options compared to the heads.

Note that with AVB, the company has made a commitment (on the back of the options form), that if they do a capital raising, they will allow time for the options to be converted so that option holders can participate.

Hope that helps.
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