Ann: Share Purchase Plan Oversubscribed, page-167

I'm going to try explaining it all to you as well as possible

Let's ignore the 2 for 1 options or the IVZ options in general and talk about options

An option is essentially a contract. a piece of paper. Not a share.

If you possess one option, you essentially possess one contract. A written agreement. What the contract states is the following

You have the OPTION, but are not obligated to, to convert (exercise) this contract to a share at anytime before it expires, and it will cost you the strike price to convert this single option to an actual share.

So the contract has 2 main terms to it

1. It has an expiry date. It does not last forever. As per the contract, if you wish to convert it to a share, it has to be done prior to the expiry date

2. It has a strike price. This is the price it will cost you to convert this single contract to a share.

I've never converted an option, but I imagine you would contact your broker or linkmarket or something and tell them you wish to convert the option you have to a share. They will set up a way for you to pay the strike price and will give you an actual share, just like your other shares. You will no longer possess the contract after this (it has been exercised.)

Now lets talk about IVZ. If you have 50k IVZ shares and 50k IVZ options and you convert your options, you will now have 100k IVZ shares and 0 options.

"The 2 for 1 options are free options?"
This has nothing to do with options in general. This is just something IVZ is handing out with their Capital Raises as an incentive for investors to get involved in the CR. They are free options because IVZ is giving them to you for free. The options are never free in any other case

"Is my understanding that they will trade at a different price that IVZ share price."It will of course have a different price as you are not trading an IVZ share. You are trading a contract. Something completely different. Since it is only a contract and not a share, it will trade much lower.

"So when IVZ sp will reach 20c, these options are exercisable....Meaning?
they can be exercised for free and sold at a lower price than current 20c?"

They do not need to reach 20c for you to convert your option to a share. You can convert them at anytime you wish prior to the expiry date. But when/IF (no obligations) you do decide to convert (exercise), you will have to pay 20c (you do not exercise/convert anything for free. it's always the strike price) to convert EACH option you own to a share, to your broker or something (not sure who you need to contact)

When these are converted, they will just become normal shares in your trading account. as I said before, 50k shares and 50k options that you own for example, after conversion of all 50k, you will just own 100k shares. You can sell these to whoever you want on market. Theyre just normal IVZ shares. No one will know any different

You can convert your options to shares the second you have a hold of them. It will cost you 20c a pop, but why would you convert them to shares if IVZ is trading at 12c? It will only cost you 12c to buy the shares you want on market, as opposed to paying 20c to convert

Generally you would only convert your options if the SP is above the strike price to make it worth your while

If IVZ SP was to reach $10 and you still have your 50k options, and it is before the expiry date (3 years for this particular IVZ option), then based on the terms of the contract, it will still only cost you 20c to convert each one even though the SP is at $10. No obligations. It's only if you want (but why wouldnt you. it will cost you 10k to convert the options (20c * 50k) and you will receive 50k IVZ shares, which you could sell to market for 50k*10 = $500k AUD)

To answer your exact question, they are only free because IVZ is giving them to you for free

Hope this helps