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Post # 3408 by amulet in the Shareholder education forum. Thanks Amulet.

STARTS:
hi kingo,

There are different types of options but the ones you are referring to are traded the same as ordinary shares and do end with an O, OA, OB etc.

Most important thing to know is the expiry date and the exercise price which you can usually find on an Appendix 3B notice. Exercise price is the amount you have to pay to convert 1 option to 1 ordinary share. Expiry date is when they have to be converted by or otherwise they will lapse.

This is largely what I posted earlier today which may be helpful:

The negatives of options can be:
- liquidity, heads are more liquid and options can be very illiquid sometimes
- options are not eligible for capital raisings, eg rights, SPPs etc
- options don't always end up in the money so if the head stock is not worth more than the exercise price nearing the expiry date, the options will become worthless

The big plus for options is the leverage. They tend to move with the heads so, for example, a 2c gain will be higher in % terms for the options compared to the heads.

The other plus for options is that they sometimes create arbitrage opportunities ie when the difference between the head stock and the option is greater than the exercise price.

ALWAYS make sure you've checked expiry date and exercise price before buying otherwise you may get burnt.

Note: There are other types of options which sophisticated traders use such as calls, puts, warrants etc and you may hear market commentators referring to option expiry which relate to these. I don't use or understand these.

Hope that helps,
a
ENDS.

Also, you can exercise (convert them to heads) at any time, but it takes about 2 weeks, so price can fluctuate wildly during that time.

I probably won't be be exercising my GGPO's, as heads price will need to be ~8.5c before 31/06/12 for it to be worthwhile for me. Definitely a chance to reach there with PB success, but not my timetable.

Try the advanced search in the top left section of the page. It's very handy to find specific information, I use it often. All the best Zippo,

Mug.