SUMO, page-26

it takes a certain scenario, and i feel it might actually play out here at sum. certain price range, and given there is less liquidity in the options there quite often is a "discount, especially as the ex date looms, or during a steep run-up (or down), heads will usually front run the options. what I have done in the past is exercise small batches of options (the form is exceptionally easy), convert, sell the heads, sometimes purchase more options, sometimes the paperwork is worth it for the arbitrage. even for new investors, why wouldn't they buy options and convert if they end up paying a cent or two more. depends on what range we're at, but I suspect if indeed we do see an increase (not getting ahead of myself), but say the 50cent range for heads, then if there's a 5cent arbitrage opportunity it'll be tempting.. also will not be surprised in that scenario to see lots of options exercised early, (often happens in those scenarios) which is usually taken as further bullish sign, catalysing more increase.. given the ex date and the fundamentals here id say management would be cognisant of that scenario.

I think people often assume the only purpose of options is leverage, and therefore think you'd buy the same value of options as you would heads, thus "1m options". far more common and likely to hold for arbitrage, and believe it or not, to protect capital. I'll often try and hold the equivalent number of options to heads, and if the strike price is met, I feel comfortable selling heads, knowing that it can "re-purchase" that amount via options.

using the example from yesterday. if you bought 50k heads @ .3 it's $15000 , 50k options at .07 is $3500
if we get a poor result given the hype and run up, this will tank hard, probably back to .1. so I'll lose $10000 on heads and even if options were worthless (but probably more likely down to .01) I've only lost at most $3500. could then even rebuy heads at .1 and still be ahead..