IBX Oppies, page-343

For those like me accumulating for the long term (3 years +) I reckon we are now at a very crucial point at which the options tick over from providing great leverage to becoming a form of ‘partly paid’ shares.

What I mean by that is, at the start of Nov, when IBX was trading at under 7c, you could buy IBXO at 2c and IBXOA at 4c (all approx). So say you wanted to load up on as much IBX as you could, the best way to do this would be to buy as many IBXOs (biggest leverage) or OAs (smaller lev but longer expiry) and then if your bullish view is proven, sell down what you don’t need at profit and convert the rest your option holdings with those profits before expiry.

So for simplicity sake you buy 2mil IBXO start of Nov for $40k, hold into Aug / Sep 2021 when the price could hypothetically be at 30c / IBXO at 25c. Your 2m Os are now worth $500k so you can sell down 500,000 IBXO to cash in and pay $75,000 for the conversion fee for 1,500,000 shares + put aside some cash to allow for tax. At this point you have 1,500,000 IBX shares fully converted with a ‘deposit’ paid of only $40k (that money would have only bought you under 600k in IBX shares if you bought shares direct at 7c). Same math with the IBXOA on a much longer timeframe and with a 3c exercise price. Of course this is just a hypothetical and there is no guarantee that IBX will be trading anywere near 30c in Sep next year. But you can do the same calculation at 20c, 25c etc. Or of course 0.125 or lower (in which case you pay the conversion fee if you choose to convert).

The difference the last month has made in this regard is massive, both the IBXOs and OAs have ticked over from providing serious leverage to being now very close to the share price. So if you tried the same thing again now, the $40k now only buys you 500,000 IBXOs. Same math but a much lower number of converted shares ultimately.

If you were to do the same again at 20c IBX, the leverage factor would only be getting smaller as 5c (IBXO) and 3c (IBXOA) as the price goes up means less and less. So say at $1 the 3c difference in IBXOA won’t make much of a difference so buyers may as well buy the heads.

Of course if you look back at March 2020 (could buy oppies at 0.001 so the example $40k gets you 40,000,000) or even June for under a cent - this entire calculation explodes with leverage. Some probably did and congrats to you if that was you.

So I believe now both the IBXOs and IBXOAs are currently at a tipping point of ticking over towards losing their leverage power for the purpose of accumulating shares. I would love to see another dip towards 10c IBX for a scoop up of the Os and OAs at approx 5c and 7c. But as the price goes up and oppies go over 10c the leverage factor gets smaller and smaller.

I am rooting for IBX in both directions simply because it is a super long term hold for me and as much I want to see my current holding go up dramatically each day, I also want to make the most of this last remaining window of options leverage opportunity we have open around these price points.

Needless to say, anything could happen in the stock market so come expiry date both Os and OAs could lose their value and not be worth converting (so initial investment in oppies is lost). So this is not advice or any strategy, simply my thoughts and mt own opinion on using the oppies as accumulation tools in the twilight of their leverage power.

Would love to hear from those that utilisee this strategy at sub 5c IBX and still hold or have converted