Ann: Capital Raising and Board Changes, page-146

At this point, if you're likely to take up your Rights Issue option, then (as always) it makes sense to place a BUY order at a cheaper price for the same (or more) shares, factoring in your brokerage fee of course. This is what I have done (a BUY at $0.18) since if I get the shares I hold the same I would anyway BUT I don't contribute to the creation of new shares.

Obviously if the issue is under-written, and a minimum amount would be created anyway, then it may not make any difference but there are two pros to this, if the BUY is picked up: 1) if it is over-subscribed then you didn't create extra shares 2) regardless of under/over subscribed you spend the same money but get more shares!

As its only a 1:10 issue I am not fussed is I don't (ever) get my BUY through even if the share price rockets (I'd be stoked of course!) During Rights Issues of course some people will buy more to get access to the cheaper issue but this is otherwise a pretty basic trading hedge if you're going to commit the money anyway. If its clear you aren't going to get the trade away then you drop the trade and take the rights issue.

That all said - I still thought it was interesting today that despite the clearly stacked BUY side, and despite there being more than 100 trades, not one trade occurred at higher than $0.022.