pycoa, page-7

Some of that is me, but definitely not all by any means. They'd have to go a fair bit lower for me to want to increase exposure now. True bottom drawer strategy, this one.

This post is self-serving, given that I hold PYCOAs, but for those who are thinking of buying, read the 25 March 2011 announcement for the full story.

PYCOAs are 1 bull market or 1 good news announcement from being in the money, and with 5 years to run, it's almost certain that they'll get there at some point.

To put some value on possible scenarios:

Buy PYCOA at 4c. PYC goes to 20c in 2 years after announcement of a milestone payment. PYCOA now in the money with 3 more years to run. Sell PYCOA at approx same time premium for 13c each. Total profit = 13c/4c = 225%

Buy PYCOA at 3.5c. PYC goes to 40c in 3 years after announcement of a milestone payment. PYCOA now in the money with 2 more years to run. Sell PYCOA at 4c time premium for 33c each. Total profit = 3.5c/35c = 9x bagger.

These options aren't for you if you need that money back in 6 months. Essentially, if you reckon that PYC is going to be a multiple of 9c by 2015, PYCOA is a nice way to gain exposure. I suspect people are selling their PYCOAs to make a bit of "free money" on something they were issued gratis when they took up the placement offer. Looking at that last scenario, I'd be doing it the other way around.