supertramp you're right about the 53c shackles. If someone bought say 100000 shares at 97c and then buys their full entitlement of 40000 shares at 53c then their average is 84.4c. They can do one of a number of things
~wait and take a gamble that they will be able to pick the turnaround and buy say 100000 at 65c which would then give them an average of 76.3c. You can divide all of the quantities by 10 and the averages will be the same.
~sell all current holdings and pick up the 53c entitlements. Risky if further positive news, which tends to have an immediate effect on the sp is released. How likely is this? Unfortunately the average for this punter will still be 84.4c.
~ no longer an option but some savvy punters may have done the following, i.e. sell at say 97c and buy as close as possible to the entitlement price of 53c. Assumption here is that there will be only a very few number of punters looking to average down and they will be able to successfully pick the low. Probably not a problem for an experienced trader. Sadly for most traders only a few make the cut to this level, thus ensuring a spate of panic buying when the turnaround occurs.
Question then is what is the most likely scenario? I'll leave that for you to decide. Perhaps it's none of the above.
orga
talk to an expert and ask them what to do
AVX Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
