Ann: Exercise of Wirraminna Option, page-26

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RedKing16

500 Posts.

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08/10/20

19:15

Post #: 47955165
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Originally posted by bobasteve: ↑

Correct me if I’m wrong but i can’t see how this announcement moved the share price down.

In finance theory the person that is issued an option bears the cost of the option (option premium) you’re supposed to pay an option premium which represents the value you receive from the flexibility. So the issuer receives the maximum value when the person that was issued does not exercise the option as they essentially receive an option premium without bearing any costs.

in this case not only was the option exercised, the issuer even agreed to lower the face value they would receive (300k in cash) to instead receive 150k face value (100k cash + 50k equity) so for this to make any logical sense the guy expects at least a 4x movement in share price by
option expiry date. My man chose to take what is almost certainly the worse decision in 99% of other cases but because this case is MDI I think he’s a bloody genius (in almost every other case it’s a bad idea because cash is risk free and to even break even to your opportunity cost you need a 4x movement in share price) this means this mad lad is hella confident that we will see a 4x movement at a minimum.

My personal take on what this guy is doing is he forced MDI’s hand to do a CR because the deal is that sweet. Share price decreases because every trader believes the false self-fulfilling prophecy that CR leads to lower share prices, even though it really doesn’t make sense on a fundamental level as the dilution you face is more than made up for by extra productive capacity from assets. Then he swoops up a bunch of depressed shares with the cash he’s got at a really really nice price.

Honestly this is he only scenario I can think of cause otherwise it wouldn’t make sense that he doesn’t take the 300k cash because its completely risk free rather than taking on equity at a lower FV.

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100% what I was thinking. He’s banking on MDI outplaying his cash option. Also a little tax cut in a way too. I can’t believe we are here. Was @ .014 for Abit today. I filled a little more. I’m getting over exposed with MDI shares but I just can’t help but but them. Will most likely get a few more tomorrow. See how we go. Give it a year we will all be laughing about this price.

MDI Price at posting: 1.5¢ Sentiment: Buy Disclosure: Held
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(20min delay)
Last 1.8¢		Change 0.000(0.00%)		Mkt cap ! $4.915M

Open	High	Low	Value	Volume
1.8¢	1.8¢	1.8¢	$1.892K	105.1K

Buyers (Bids)

No.	Vol.	Price($)
2	400000	1.7¢

Sellers (Offers)

Price($)	Vol.	No.
1.8¢	95779	2

View Market Depth

No.	Vol.	Price($)
2	400000	0.017
2	325000	0.016
3	2341000	0.015
5	5253000	0.014
1	500000	0.013

Price($)	Vol.	No.
0.018	95779	2
0.019	184024	1
0.020	481082	3
0.021	184200	1
0.022	100000	1

Last trade - 13.48pm 06/11/2024 (20 minute delay)

MDI (ASX) Chart

Ann: Exercise of Wirraminna Option, page-26

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Ann: Exercise of Wirraminna Option, page-26

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