Email today:Over the past week we’ve been speaking with UNITH (ASX: UNT) shareholders with a few of the recurring queries being around the Options and how they work. This is understandable as not all shareholders have exercised or traded Options before, with two different Options free-attached to the Entitlement Offer.
What are Options?
An Option gives a buyer the right, but not the obligation, to buy a share at an agreed-upon share price (the strike price). The Option comes with an expiry date, after which it can no longer be exercised.
The free-attaching Options issued via the Entitlement Offer give participants the opportunity to profit more from a rise in UNT's share price without risking any additional outlay.
What are the UNITH Entitlement Offer Options?
Eligible shareholders who accept their Entitlement will also be issued one 1 free-attaching Unlisted Option and 1 free-attaching Listed Option, for every 2 New Shares issued to eligible shareholders.
Each Unlisted Option has an exercise price of 2.3 cents and will expire at 5.00pm (AWST) on 30 September 2024.
Each Listed Option has an exercise price of 3 cents and will expire at 5.00pm (AWST) on 31 March 2026.
Listing of the 2026 Option is subject to shareholder approval at the General Meeting on 28 March 2024, but once listed they can be traded on the ASX via your broker and will appear in your online portfolio. You can view a guide to lodge your online votes here.
What are the Options currently worth?
The current value of the 2026 Option is between 0.30 cents and 0.82 cents based on the 4-year volatility data on UNT shares using the Binomial American Options Pricing Model.
The current value of the 2024 Option is between 0.16 cents and 0.44 cents based on the same model.
How can I calculate the future implied value of the Options?
Let say you have 100,000 options that expire in 2026 to buy UNT shares at 3 cents. Prior to expiry: If the UNT share price is 5 cents - you can buy the shares for 3 cents, for an unrealised profit of 2 cents per share. i.e. $2,000 (100,000 x 2 cents).
If the share price is less than 3 cents - you do not need to take any action, as the Options expire worthless. As the holder of the Options, you have the right to exercise your option any time prior to the March 2026 expiry or sell them on-market if they are Listed Options.
Please note that these examples do not factor in time decay whereby Options are worth more the further away from their expiry they are.
How do I exercise the Options if I want to buy the shares at the strike price?
It's all electronic nowadays. You will log into the online share registry with your HIN where you'll be able to see how many Options you have, the strike prices and expiry date.
From there, you select how many you would like to exercise and it will process it all for you with online BPAY details that are unique to you and your Options being exercised. Once payment is made with those BPAY details, your new shares will be issued and the corresponding Options will disappear from your portfolio.
Funds from the exercising of Options are paid to UNITH.
