atten frader, page-3

You could also short sell and close out the short with the shares once conversion goes through. Its a form of arbitrage.

Its basically right, that options are a form of prepiad loan. You have paid the interest upfront, ie 0.2c. Their are subtle differences ofcourse. Like the fact you aren't required to repay the 1.5c, you can elect to walk away. More like a car lease, you are given the choice to make the final balloon payment or hand back the keys.

So it offers some downside protection. If the shares aren't above 1.5c you can chose to walk away and you lost only the 0.2c

In reality, selling pressure occurs around conversion time, both prior (in anticipation) and after ex date. People are forced to sell down in some cases. So in reality, you arent looking for 1.5c, you are actually looking for closer to 2c

Lets take the last sale prices of PN)=1.2 and PNOO=0.2c and assume that come June PNO=2c

2.0/1.2= 66% increase.

PNOO = PNO -1.5c = 0.5c (closer to expirey)

0.5c/0.2c = 150% increase

Clearly anything 2c or above would benefit PNOO more than PNO. Anything less benefits PNO more. Slightly different risks, ie time is major factor with PNOO.

Theirs no right answer. You need a healthy mix of head and options IMO. What you sell and when will be different for everyone. Some will sell heads to pay for conversions, while I know many choose to sell option. Sell 70% of your options to cover the conversion cost of the remaining options.

Remember options typically stop trading about 1-2weeks prior to expirey. So if you have no intention of converting, you need to sell earlier. Many are in that boat. Turn a quick 0.2c into 0.5c and exit.