Ann: Company Update, page-113

First 113 Last

Share
Profile

Follow
tennotw

6 Posts.

19/01/17

11:27

Post #: 21996551
Share

Originally posted by makattack ↑

Trying to make it simple as it is relatively simple once you get your head around it:

RMXOG. You can buy this like any normal share but it expires in Nov 2019. So by then if you don't want to lose your money, you have to either 1. sell them again before then or 2. exercise them into a normal share (RMX)

1. You buy at for example, 1.8c and you sell it in the future. There's your profit or loss.

2. You exercise it. Each option has a different exercise price. RMXOG is 1.5c. So you now need to pay another 1.5c for each share and your RMXOG converts into a normal RMX share. Each share has cost you the original 1.8c (in the example above #1) PLUS 1.5c = 3.3c.

There are two main reasons people buy options instead of shares.

1. To attain the RIGHT to more shares with less cash. RMXOG is 1.8c, RMX is 3.3c, if you currently have $10,000 to invest you can attain the RIGHT to more shares by buying the options and pay the rest later (in Nov 2019 if you wish). You in effect attain the right to almost double the number of shares than if you buy RMXOG instead of RMX.

2. For shorter term traders to make more money as the return is higher. For example if RMX goes from 3.3c to 6.6c then you double your money but RMXOG would also rise to approximately 1.5c less than that (the exercise price) which would be 5.1c and that's closer to tripling your gains from the current 1.8c share price. Of course if the price drops instead the opposite occurs and it means a greater loss (risk/reward).

I hope this helps a little.

Expand

Wow that sure makes it more clearer to understand. Thanks for that. So in essence, RMXOG (or any other options in general) is a great buy if i anticipate it to go up betwen now and the end date?

RMX Price at posting: 3.3¢ Sentiment: Hold Disclosure: Held
4 Upvote

0 Great analysis

Reply

Top Stories

YAL

Yancoal makes it into the ASX200 in latest S&P rebalance

CNB

Carnaby Resources hits copper at Mohawk, QLD

CBL

Control Bionics expands into UK and Irish markets with NeuroNode device

GDC

Global Data Centres not clear on future operations after AirTrunk sale payout

RMX

Red Mountain Mining: record gold prices, two projects, two greenstone belts