gdaoa and a barina or a bmw

Some people have queried the value of buying into Gondwana "a" options (gdaoa) with a 5 c conversion in June this year.
If you are interested, I thought I'd explain the risk profile I use to explain the philosophical investment strategy I use.
It's all about increasing the % return in relation to the risk exposure.
If I want to be conservative, I put my money in the bank and earn what 5% ?
or I invest in a home as my principal place of residence and balance the interest rate risk and the property value going up or down risk to the likelihood of the property appreciating, or
the slightly higher risk/return investment is say buying the banks shares and getting a fully franked dividend of say 4%, the risk being the shares go down because of whatever world or domestic factor. Or the dividend decreases because their forecast profit plunges because of some negative news say, with the U.S. sub prime lending disaster as just an example.
Another with a higher risk and higher return is non blue chip shares,
another is small cap shares
and another and one of the highest risk/return ratios is for example small mining companies like Gondwana and Flinders who are explorers not producers (yet).
Market sentiment appears to be bearish which means blue chips are not likely to continue their stellar run this year as they have for the past few which means there will be more than a few investors around Australia looking at investing in shares that might just have a higher return ( and also higher risk). A lot of investors will be assessing their risk aversion due to the U.S. market sentiment, the world economic outlook and the ASX future direction.

So here we are,we have a variety of investments in the above in various proportions to our personal risk profile.
Let's say I have (as purely an example), invested 70% of my assets in my principal place of residence and 20% in non producing assets like cars, a caravan, motorbikes for the kids etc and I have 10% allocated to invest in the share market. I take out a line of credit and can claim the costs.
I have not included any allowances for capital gains tax, GST, brokerage etc to keep the calcs simple as possible.
( and besides, I have an accountant to do that for me)
I already have most of my assets invested in what is generally considered a low risk/medium return asset, our home.
I have 10% for which I have allocated for high risk with a high return. I am not about to allocate all of it to say buying a bank share or listed property trust as the risk or the return is not meeting my strategy.
So I research small under valued little known mining companies and select the three or four I think have a potential upside and look at increasing shareholder value.
I have explained in previous posts what I like about GDA and FDL so I won't repeat why I have identified these in the asset allocation here. ( you can search through my previous posts and find the one's that don't have a "re" in front of the subject heading to see the initial post, all the one's with "re" in front of them are usually replies (but most of you already know this so sorry for being a bit tedious,am just trying to provide info for all the new hot copper people and those new to stocks and particularly one's like GDA and FDL). The more people that know about, understand and have some confidence to invest in companies like GDA and FDL the more chance I and every investor has of growing their investment because of increased demand/ increased awareness,increased discussion around the Barbie and workplace etc. An increase in market cap also adds value to the company when they enter discussions on any joint venture and when they raise capital ( less of the company is diluted the higher its market cap is worth).
There are many many good small companies that no one talks about and they are therefore not on the radar of people who might otherwise be interested to invest in. Some companies get over exposed and the price goes up to ridiculous levels just because everyone is talking about it which is the other extreme of what I am talking about here.
The success of a company is to find genuine interest and support from investors. Most companies are pretty hopeless at communicating with their shareholders and the broader market so that's what I do in my spare time, I talk about what I think is good or needs sorting out and I try and get the company management to respond and tell us what's planned, what they have and provide us with info that helps us come to an informed decision about investing in the company and becoming a part owner with our hard earned money, in this example, the allocation of 10% of my assets.

Now back to the Barina or a BMW.
The example I will give to explain my risk/return strategy is with GDAOA but I will also give an example of a small investment I have in GPNOA to illustrate the high risk and the higher return strategy.
I bought some GDAOA yesterday and most would think I am loosing the plot, so, let me explain.........
I have several share holdings in a variety of companies and some of them I allocate a proportion of the say 10% I spoke about earlier in this post.
Of the 10%, let's say I allocate 30% of it to the high risk shares which in this case is GDAOA. Let's say we compare a $10,000 investment ( which seems to be about the normal investment on the asx) and the return I am targeting if we compared the return on investing the same $10,000 instead in
say GDAOC, GDA, GPN, GPNOA or RIO ( to illustrate the other extreme).

$10,000 invested in GDAOA yesterday at say the vwap of 1.6c will have bought you 625,000 shares. Each .001c movement in price is $625, a 1c increase is $6,250 and a 10c movement is $62,500.

$10,000 invested in GDAOC at say 2.8c would have bought 357,142 shares. Each .001c movement is $357, each 1c movement is $3,570 and each 10c movement is $35,570.

$10,000 invested in GDA at 4.4c would have purchased 227,272 shares. Each .001c movement is $227, each 1c move is $2,272 and each 10c move is $22,727.

$10,000 invested in GPN yesterday at 2.4c would have bought 416,666 shares. Each .001c move is $416

$10,000 invested in GPNOA at .004c yesterday would have bought 2,500,000 shares and each .001c move is $2500.

$10,000 invested in RIO at say $130 buys 46 shares and if it goes up by a $1 it returns $6am if it goes up $10 it returns $460.

You can work out how much each of the examples need to go up in price to work out what increase in share price for each has to occur to match the % increase of investing in GDAOA.

These examples illustrate the return on $10,000 for each (whatever) movement in the share price.

In the case of GDAOA, my scenario for the risk is the price drops to say 1c and the investment looses $3,750 if I decide not to sell before it goes down to 1c. On the return side, I think the main share or head share ,i.e., GDA can rise to 10c before the end of the month ( on increasing demand on news and exploration updates) or before the expiry in 30 June 08 (on quarterly reports, further news, target resource estimates of iron ore at wallal downs in the Pilbara etc),( share price to be recalculated for post consol' and assuming I don't convert them). Allowing for a normal option premium of say just 1c in this example ( it is at a 1.6c premium at a price of 1.6c at the moment), the value of the share trading at 6c is $37500 less the initial $10,000 is $27,500 or a return of 275%.
In comparison to the less risky GDA example, the profit on 227,272 shares at GDA trading at 10c would be $12,727.23 ( 10c-4.4c = 5.6c x 227,272 )or a return of 127%.

In the case of a smaller investment amount of $2,000, to illustrate the higher returns on being able to buy a larger number of shares in GPNOA,I bought 500,000 at .004c and let's say I sold yesterday at .007c, I would have a profit of $1,500 or 75%. If it was $2,000 invested in GPN at 2.4c I would have bought 83,333 shares and say sold them at 2.7c is a profit of .003c x 83,333 = $249 or 12%. Even if Isold the GPNOA for just .001c, the return is still higher because of the larger number of shares for the same dollar purchase (outlay).

I doesn't matter what your sell trigger price is , whether it's when the price is up .001c or 5c, the return is higher on the share you can buy more of for the $10,000 ( or whatever), and the risks are greater but so are the % returns, so it depends on your personal risk/return percentage investment strategy. It's your call not mine.
This post is long enough already so I won't do the rest of the examples but if you have time it's worth the education/ exercise if you don't already know this stuff. I have done about 55 hours research on GDA so far and probably need to do another 40 or so to be the full quid on it but I like what I see both in the week to fortnight time frames, the end of month time frame and the 3 to 12 month time frames.

I own GDA, GDAOA, GDAOC and GPNOA.

For about 5 years I have encouraged my kids to put some money aside which I match dollar for dollar in the share market.
I have allocated a portion to GDAOA in my daughter's portfolio to potentially see GDA help her buy a car next year, depending on the GDA news in the various time frames, it might be a Barina or a BMW and it might be debt free or it may need a loan, either way, she is a lot more interested in the shares than she was last week, lol.

Don't buy or sell based on what I am doing, do your own research and make your own decisions according to your own risk profile and knowledge.

cheers Fatstocks.