I have a query about options. If anyone has the knowledge to answer it It would be greatly appreciated.
I present the following scenario
Company ABC has options known as ABCO. The prices of fully paid shares and options as of today are as follows:
ABC - 20 cents ABCO - 5 cents
The expiry date of theses options ABCO is March 30 2008 (10 days time)
The exercise price of ABCO is 30 cents per option
There are 100 million options.
Potentially the company could raise $30 million through the exercise of these options. The problem that exists here is no-one in their right mind would pay the exercise price considering where the Share Price is trading at the moment. They would let them expire and take the capital loss.
My question is this. The comapny knows that it can potentially raise $30 million through the exercise of options which will greatly benefit the company financially in expanding various projects they have.
Can they do anything to extend the expiry date of the options or make the terms more favourable for option holders? Or is this the risk you take when purchasing options?
