All in all, i reckon the BS model is pretty much that and particularly irrelevant for pricing options such as CDVOA where the price, purely a function of the CDV, is largely driven by a constant stream of new developments eg drill results, capital raisings, ground acquisitions and gold price action.
Simply put, BS model was not designed for such 'action'.
That said, with 15c strike - and with the options well in the money - what is a reasonable price to attribute to the time value/leverage factor here?
Well, imo, even on a gut feel, 5-7 cents, depending on day to day swings, seems about right.
The CDVs have been in demand of late - most likely those big boys who missed out, partially or fully, in the CR at 29c (doesn't that seem like a lifetime ago?).
In such circumstances, when the heads are literally moving up every day, hard for the options to stay in any sort of sync. once the price 'settles down' - maybe it won't for a while yet , the options should start to trade at a price margin of 8 to 10c behind the fully paids.....imo.
So, there's still some catch up to be had imo.
More news today? i think last week was Monday?
And surely Hartleys is due for an update? EI later today I gather - should be a decent write up after JID had a very polite crack last week
As some say GLTA!
CDV Price at posting:
45.5¢ Sentiment: None Disclosure: Held
, the options should start to trade at a price margin of 8 to 10c behind the fully paids.....imo.
