I expect most of the options will be exercised by bigger players. They'll either have the cash to exercise regardless, or they will have sold stock into the highs above 5cps in August and September, and be retaining that cash ready to exercise.
Pretty difficult to collect 300m shares at 2cps, even if the price was to get down to that level. The only way to achieve that, I would have thought, would be to force a cash raise at those levels or to get yourself an options underwrite ( hat tip @binwood ). But I suspect most of the ops are in bigger players hands already.
What is happening now, I think, is that some who are holding a reasonable amount of options and heads, who missed the opportunity in Aug.Sep to free up some cash, are selling heads to finance exercise.
I am presuming the options market isn't liquid enough for them to just sell options.
That's a valid play, so long as they hold both heads and options, the heads are worth more than the options 2c exercise price, and they are not wanting to put up more capital.
That means that the price could continue to slide towards 2c. But the day they've sold enough heads the selling pressure will stop, the market will spot that and the bounce could be quite dramatic. It may not be easy to get back in with much volume at low prices.
imho the worst case here is that the options aren't exercised and AVL is short of cash. @binwood 's idea that someone is making a play to take the options out of the money, to get an underwriting agreement, might be valid. Equally someone could be trying to actually force a cap raise down here. But I'm more inclined to think this is just belated option exercise financing. And that the guys that want $6m and 300m more shares of this are already holding options and are ready to exercise. Vince would be almost negligent if he didn't have that lined up. He'll have been talking to those holders and I don't see him concerned at all about funding to get on with the DFS.
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