AW1

4.00%

13.0¢ american west metals limited

Excellent post Tran. I've seen seen many of these discussions...

First 273 Last

Share
Profile

Follow
mixie

404 Posts.

117

09/08/23

21:27

Post #: 69256538
Share

Originally posted by Tran: ↑

What the heck.

I cannot believe you ask these questions.

Strike price is 20c. You pay the company 20c to convert each option to each share.

How much you paid to acquire your options has no relevance.

People buy options even at a premium ([option purchase price + 20c excercise price] > head price) because they can buy almost double the quantity of options compared to shares. The main reason is: we all believe the share price has very strong potential.

For example: when sp was at 20c a few weeks ago, with $20000 capital, you can choose to buy 100000 shares at 20c or you can choose to buy 200000 options at 10c.

1. If you believe sp will reach $2 before its expiry date in Sep next year. Then by that time, you would need to pay the company 200000 options × $.20 = $40k to convert options to shares.

Total capital = $20k + $40k = $60k.

2000000 shares sold at $2 per share = $400k.

Total profit = $400k - $60k = $340k.

2. If you had chosen to spend $20k to buy shares you would be holding 100k shares = 100k × $2 per share = $200k.

Total profit = $200k - $20k capital = $180k.

If by expiry date sp is $4 per share

1. Options:

Total capital = $60k

Total value of 200k shares (converted from options) = 200k × $4 = $800k.

Total profit = $800k - $60k = $740k.

2. Shares:

100k shares × $4 = $400k

Total profit = $400k - $20k = $380k.

From the above 2 examples you can see the POWER of options IF sp increases significantly within the next 13 months.

If sp is at 40c-50c by Sep next year, then holding options is less of a benefit to the holders obviously.

So, why do people choose to buy options? (I am one of them). It is because people do strongly believe this stock still has so much growth potential in the next 12-13 months.

Expand

Excellent post Tran. I've seen seen many of these discussions over the years and but have never seen such a clear and concise explanation. I usually buy oppies over heads for the leverage and just to trade, but have never even considered converting them. But I suspect with the way AW1 is going, a conversion episode is on the horizon. Pay no attention to TST, probably had a few bowls ey T? ..
Thanks Tran

AW1 Price at posting: 35.5¢ Sentiment: Hold Disclosure: Held
11 Upvote

0 Great analysis

Reply

Top Stories

LU7

Lithium Universe (ASX:LU7) board visits Quebec to engage key stakeholders

Microcap Wrap: 5 explorers with news out today

CMX

ChemX Materials kicks off first stage works at WA high purity alumina pilot

SS1

Sun Silver gets that drill to thrill feeling from high grade hits at Maverick Spring

RCE

Recce's R327 found effective against E.coli during clinical trial

Week 26 Wrap: Cerberus of inflation barks – rents, electricity & fuel – and world watches two elders bicker

AVA

Ava Risk Group expands US presence with A$0.7M Substation Deal

LRV

Larvotto identifies new exploration target at NSW's Hillgrove, boosting shares by nearly 20%

SVL

Silver Mines models five new calderas close to 396Moz Bowdens deposit

Wealth Within weighs in on shock 4% inflation read – and stocks that could survive the gloom

There are more pages in this discussion • 86 more messages in this thread...

First 273 Last

Add AW1 (ASX) to my watchlist

(20min delay)
Last 13.0¢		Change 0.005(4.00%)		Mkt cap ! $67.29M

Open	High	Low	Value	Volume
12.5¢	13.5¢	12.5¢	$131.3K	1.025M

Buyers (Bids)

No.	Vol.	Price($)
2	243565	13.0¢

Sellers (Offers)

Price($)	Vol.	No.
13.5¢	363322	8

View Market Depth

No.	Vol.	Price($)
2	243565	0.130
5	493600	0.125
15	487666	0.120
5	574356	0.115
8	628454	0.110

Price($)	Vol.	No.
0.135	277322	5
0.140	743752	5
0.145	101538	3
0.150	347626	10
0.155	189211	5

Last trade - 16.10pm 28/06/2024 (20 minute delay)

AW1 (ASX) Chart

Excellent post Tran. I've seen seen many of these discussions...

Lithium Universe (ASX:LU7) board visits Quebec to engage key stakeholders

Microcap Wrap: 5 explorers with news out today

ChemX Materials kicks off first stage works at WA high purity alumina pilot

Sun Silver gets that drill to thrill feeling from high grade hits at Maverick Spring

Recce's R327 found effective against E.coli during clinical trial

Week 26 Wrap: Cerberus of inflation barks – rents, electricity & fuel – and world watches two elders bicker

Ava Risk Group expands US presence with A$0.7M Substation Deal

Larvotto identifies new exploration target at NSW's Hillgrove, boosting shares by nearly 20%

Silver Mines models five new calderas close to 396Moz Bowdens deposit

Wealth Within weighs in on shock 4% inflation read – and stocks that could survive the gloom

Featured News

Buyers (Bids)

Sellers (Offers)

Featured News

Excellent post Tran. I've seen seen many of these discussions...

Top Stories

Lithium Universe (ASX:LU7) board visits Quebec to engage key stakeholders

Microcap Wrap: 5 explorers with news out today

ChemX Materials kicks off first stage works at WA high purity alumina pilot

Sun Silver gets that drill to thrill feeling from high grade hits at Maverick Spring

Recce's R327 found effective against E.coli during clinical trial

Week 26 Wrap: Cerberus of inflation barks – rents, electricity & fuel – and world watches two elders bicker

Ava Risk Group expands US presence with A$0.7M Substation Deal

Larvotto identifies new exploration target at NSW's Hillgrove, boosting shares by nearly 20%

Silver Mines models five new calderas close to 396Moz Bowdens deposit

Wealth Within weighs in on shock 4% inflation read – and stocks that could survive the gloom

Featured News

Buyers (Bids)

Sellers (Offers)

Featured News