For starters Serena, 3.3 is the
average buy price, for my present holdings of 88EO (the oppies).
I have calced - from this Thread’s 1
st 30 (or thereabouts) posts – for the 5 hours between 10.15am & 3.07pm – posters’ av. Buy price for their 88E (the heads), was 4.2c.
Secondly most of those posters have stated or inferred that they’ve been L/Term holders.
I have
not been such a L/term holder.
I refer you now to the SP range of the heads for the period :
10Apr to 05Jun this year, when I
traded in some oppies.
The heads’ range was between a low of 4.4 to a high of 5.2 (just prior to the Co.’s Ann – in the 1
st week of June - that they were to proceed with a production testing process – an exciting step, to oil-exploration-company traders & investors alike.
So let’s say for the purpose of this discussion that the av. Price for the heads, during the above period, would have approximated 4.8 – the mid-point between the low& high SP’s quoted in the previous para.
Deducting your very often-posted opinion of the oppies almost always being “overvalued” i.e. trading @ an SP of less than 2c below the heads SP, which opinion did turn out to be correct during this period – i.e. an av. of 1.9c below the heads SP. i.e. the oppies’ high & low SP’s were in fact 3.4 & 2.5 respectively, during the said period = to an av. of 2.95c for the oppies,.
So, using my expert leverage skills which you appear to think I have – like any other poster similarly blessed with – if I had $48,000 capital – I could acquire :
- 1.0m heads @ 4.8c,
but more attractively so
- approx.. 1.627m oppies @ 2.95c.
So any 1c rise therefore in the SP of the heads would also “create” a similar rise in the SP of the oppies.
The resultant ROI though becomes obviously 62.7% higher, from oppies held in lieu of heads.
Obviously any downturn – by a cent below one’s cost price – becomes a 62.7% greater loss.
It is important to hopefully finally stress – like so many other posters who have tried to do so before me – that
at the time you were promoting your “overvalued” opinion of the oppies’ SP there was never any concern by any oppies’ holder of the likelihood of them having to
soon fork out 2c for the Exercise price (to convert them into heads), only inevitably,
when the period of time to the oppies’ expiry date becomes as short it has become now, only about 4 months away.
We HC posters all know, with the advantage of hindsight, that what IMO all share & optionholders (“we”) once anticipated – i.e. the Co.’s expert management confidently expecting
- to achieve a desired goal of a 30% flowback rate for the frac fluid AND
- to do that within the “weather-permitting” time before the date they’d have to shut-in the well
did not eventuate, as announced in recent weeks.
However back in June – for several trading days straight after the “production-testing” Ann –
probably “we”, but certainly a lot more new buyers - entered the market - in both the heads & the oppies – naturally pushing upward their respective SP’s.
The following data tells you illustrates the dramatic shift upward in
average volume traded/day by each of the heads & the oppies, once that Ann was made :
- in the 37 uneventful trading-day period 10th to 5th June :
Heads traded
8.8m/day & the Oppies traded
1.1m/day
but !!
- b) in the 11 most-probably-considered speculative trading-day period 6th to 21st Jun :
Heads traded
21.1m/day & the Oppies traded
6.1m/day
I traded in period b), and still hold some bought then, hence my currently higher av. cost price per oppie held.
IMO I’d reckon that – because of the huge jump in av. volumes traded per day in the 2nd period above - there’s 1 or 2 or 102 other HC readers following 88E posts who are in a
similar boat to me , but in their case
only bought their 88E in period b)
& are still!! holding them! and
also did not want to openly declare what their av. heads’ holding price still is, compared to their predecessors
who
only bought their current holdings – either heads or oppies or both - in period a)!! Agreed?
I trust I’ve answered your post – albeit in a long-winded way to some other readers, but then we’re not all tarred with the same brush, with English expression, are we.
If you’ve still not got the point – about greater leverage being obtainable by having bought the oppies instead of the heads –
back in June 2017 –
- when the Co. Ann that they were now planning, & confidently expecting to achieve a desired goal of a 30% flowback rate for the frac fluid AND hoped to do that within the “weather-permitting” time before the date they’d have to shut-in the well, and
- with 8 months then still to run before the oppies expiry date.
(Your point is taken about your repeated post’s reference - right up to this month – on just so many Threads!! – about the oppies being overvalued back in Nov/Dec 2016, according to your viewpoint about the Black-Scholes model.
The oppies certainly were then – with a SP diff. – between them & the heads often being < 1.5c.
But that was not the case in June 2017 – as I‘ve explained above – when that intrinsic decaying-time value pushed that diff. closer to 1.9c).
then IMO you need to consult a professional practising accountant.
If you choose to do this, then please ensure you tell him all of what I’ve said above, otherwise he’ll cut you off mid-story, just like Doc Martin! :)
Finally, please repost your post about the overvaluation of the oppies in Nov/Dec 2016.
I’m amazed how you expect anyone to search back through umpteen pages via your Profile link to an unknown date of such post, let alone locate the Thread under which you submitted it.
And also tell us the 4 words for your tiresome DYOI abbreviation, at the end of your posts, which I note no-one else uses ‘cos I’m a glutton for punishment & imagine no-one else cares – given the av. # of thumbs-up you get for every post you submit. Guata.
(20min delay)