I understand that a dilution of your share of a company through...

I understand that a dilution of your share of a company through a SPP or CR is usually accompanied by a fall in the share price, which to some degree is also pre-empted by the discounted SPP price. What I don't understand is what you mean by "Retail punters get told to finance the spp by selling shares they currently own effectively giving them a free option." I'm probably misunderstanding you, but why would you sell to buy back in at a higher price through the SPP?