monday, page-16

Hi Selwyn - the exercise price of the FDL options (trading as FDLOA) is 10 cents , So if you held the options on the date they expired ( 29 th September 2008) you would have to pay up 10 cents per option to then convert and own the fully paid share in Flinders . So if the options were trading at 40 cents it would probably mean the fully paid shares (referred to sometimes as the heads) would be trading at around say 50 to 55 cents . You would then pay 10 cents only per option to own these 50 to 55 cent heads . So if you purchased the options (oppies) now at current levels of say 7.8 cents and by September 2008 they had risen to 40 cents AND your intent was to use them to buy into the heads then your total cost would be the 7.8 cents per option paid right now plus the 10 cents paid for each option on expiry to convert into a full paid share ... i.e. total cost to you = 17.8 cents per option paid to buy a 50 to 55 cent head . Good deal if that scenario occurs !
Alternatively in that scenario if you say held a 100,000 options at current levels (100,000 x 7.8 cents = $7800+ brokerage costs ) and come September 2008 you did not have the $10,000 to convert the 100,000 options at 10 cents into the fully paid shares then you could sell your options pre-expirey . So say if they were 40 cents then 100,000 x 40 cents = $40,000 (less brokerage) and you would be looking at a profit of somewhere in the vicinity of $32,000 !! All depends on your strategy . Hope this helps . Cheers , Wardy34