Thanks for your reply which I initially missed due to so many posts on CTP.
I realised after read my post that my message may be ambiguous. I am in complete agreement with your calcs. There is no doubt that generally opps.give you better leverage/profits. I try to remember when looking at a new stock to check out the opps.if there are any with reasonably long conversion dates.
The point that I failed to make clearly is that in a rising market the longer you wait to implement the decision (as in my case to sell the recently acquired rights issue shares & replace them with opps.) then the less you will benefit. As the prices increase you get relatively fewer options than shares.
The reason I became aware of this is that I sought to execute this strategy recently. I thought I could sell 70K of shares and buy 140K of opps. on the same day so that I wouldn't have to fund any shortfall. I tried to get better than 2 to 1 and waited too long hoping for the opps. to come down. I realised on 26 Aug as prices took off that I had been too greedy and missed my chance. I plunged in & bought 140K of opps. @ 5.4c as I could see sentiment had changed. The shares closed 10c on that day.I funded this by a sale of some useless TLS. Its too late now to get twice as many opps. for my shares and the proportions will continue to fall as the prices rise. Today they closed @ 7c & 12.5c respectively.
The silver lining to all this is that I still have the shares and because I'm bullish about CTP I will attempt to find an opportune time to convert them to opps., possibly tomorrow.
I have been surprised to see some posters on CTP are a little reluctant to hold the opps. but I have no fears, especially with the long conversion date and reasonable exercise price.
ANZ
CTP Price at posting:
11.9¢ Sentiment: Hold Disclosure: Held
