options , page-5

The market has a way of pricing these things. Think about this. A fully converted loyalty oppie will cost 19c. Atm share price is 29.5c. roughly the converted op is at a 35% discount to an on market share. But you only get 1 oppie for every 5 heads you hold (sorry about the terminology Clark). So you need to divide that 35% by 5 to work out your net benefit of the ops over the on market shares without ops. Sooooo at today's price you are getting a 7% premium. I think when the dust settles after any sell off this fomula may provide the price of the discounted on market shares post oppie issue.

Of course the SP will in all probablity move on between now and the record date so the discount may be greater than 7% by then. To pick a nice easy number say the SP has moved on to 38c by the record date. A converted loyalty op will be a 50% discount. Divide by 5 gives you a 10% premium. And that is how much the market may adjust the SP by. 38-3.8c = 34 to 34.5 ish.

But when you think about it we have seen bigger swings than that last week. Hell, one decent ann. might see a swing to the upside much greater than 10%. My view is to hold through the "oppie induced correction" as it is only going to be a very minor bump in the scheme of things that could easily be counteracted in the short term without warning.