Interesting. Thanks @excitable2 - I had not considered doing...

Interesting. Thanks @excitable2 - I had not considered doing this.

So - one option if you have funds available - is to effectively "convert" options to heads by selling options and buying the same number of heads. This will cost you the "difference" - which is currently around 1.5c - a full 0.5c cheaper than the full "conversion" rate (i.e. the 2c "strike price"). If you have the cash and intend to convert options in future anyway, this could be a good opportunity to do so as it resets the start date on your 50% "capital gains tax discount" timeframe - assuming you are investing outside of SMSF and this applies to you - this is not investment advice!!

The alternative is to convert the same VALUE of options into heads. You would generally do this if you thought that heads are likely to go up in value (in the short term) faster than options - i.e. you think that the current time-premium on options has gotten a bit too high. The time premium on options has generally been somewhere between zero and around 0.3c - and is currently between 0.5c and 0.6c.

So - if you sell 100,000 options at 2.3c, you end up with around $2300 - which you can then use to purchase around 62,160 heads at 3.7c for same amount of money. If heads go back up to 4.2c (and assuming oppies keep to typical 0.3c time premium, so around 2.5c) - you can sell the heads at 4.2c (bringing in around $2,610) and buy the oppies back - you now have 104,000 oppies - an almost risk-free 4% increase in your holdings.

I've generally favoured buying the options given the bigger leverage they provide and the long timeframe (no pressure to convert) - however given the current dip in the price of heads bringing the two closer in price - converting some options to heads may make sense.

That said - if you have spare funds now and you think that the SP will be considerably north of current prices in the next 12 months - you'll still get a more options for your money than heads - so far more upside for any increase.