blk coal sector in afr, page-5

that's just the market.

The heads lead, ie, they make their move first, you'll probably find that the head prev trade was around 50.

More volume tends to go toward the heads, as they are fully paid, and the CGT 12m relief begins today, wheras if you convert the options later, you have a secondary event, that starts the cgt relief of the converted from that date.

The heads also offer other rights, so in general, there is good reason to buy the heads over the options.

But, for leverage, you'll be aware the power of the oppies, and if you plan on converting and holding long term, better use of todays dollars.

If your trading a portion, then the oppies offer greater gains and losses.

As oppie volume is generally lower,indicated more of the market wants the fully paids.

So, back to your question. The heads have lead, why haven't the oppies followed? and now there is a gap.

It's just a matter of market phsycology. Currently the oppies have a buy sell at .285 and .33, while the heads are .53 and .545.

If someone paid the asking price of 33, they'd be on the money.

In fact there can often be a larger gap, and sometimes its just that the oppies havent had the chance to catch up,
but take into account a smaller volume then you dont expect them to be so reflex.

And it can also indicate sentiment, if the oppies were only say 15c behind the heads, with the heads rallying, would suggest that the sentiment for the heads is to push higher. And conversely, if you see the heads trailingby say 45c, then it is an indication also that the heads have overshot the mark, and sentiment would be for the heads to retrace.

So, sometimes, it's just volume and low reflex, other times its sentiment on the heads.

But it comes down to what you beleive is a fair price for the heads, and what price bargain, you take on the oppies.

Hope that helps.

cheers