the free options, page-5

@Mo1983

The options have a strike price of 1.9¢, and expiry date of 30/11/2026.

So, let’s assume that Freddy had 800,000 SRN shares as of the record date and he applied for his full entitlement of 100,000 shares for a total consideration of $1,100. Under the offer he will also receive 100,000 company options.

Now, if the company is successful with its application to list the new options on the ASX, then Freddy will be able to trade those options in the same was as normal share trading.

Let’s say that the company was successful in listing the new options and Freddy decided to sell half his options and convert the remaining half.

Since the options are only new, they have a long expiry date and the strike price is exceptionally generous, it’s likely that they will commence trading at a premium.
If the shares are trading at say 1.6¢ and the options at .5¢, the options are said to be trading at a premium of .2¢.

1.6 + .5 - 1.9 = .2¢ premium

Now, let’s get back to Freddy. If he sold 50,000 options at .5¢, he will pocket $250 (less brokerage). He decided to convert the remaining 50,000 to FPO shares. He has up to 30/11/2026 to do this, at a cost of 1.9 x 50,000 = $950.

NB: There are no fees to convert the options.

So, how does he convert his options to SRN?

If he hasn’t received the application form to convert his options to ASX:SRN he would contact the registry and they’ll email him the necessary form.

When trading and converting options there are obviously CGT implications to consider. If you convert the options to FPO shares, the CGT clock starts from the conversion date.