the week that was, page-17

toxo vs tox Hi guys

Away all day & just having a read of this thread - good reading looking at different strategies!

Nightstalker - Well done with TOX!

Can I put in my 3 cents worth? I am a real believer in the value of option leverage. I have now sold 90% of my TOX (I still hold some in my super fund) & have converted it to TOXO, getting an average of 1 cent discount & much more leverage. “Tax” I hear you all screaming! LOL. I don’t care! My belief is: 1] a bird in my hand is better than 2 in the bush! 2] middle of June I transfer BIG portion of profits into our SMSF’s & pay only 15% tax.

Three more points to consider:

1] In the past I have lived in fear of paying tax, held onto a winning position for 12 months & avoided paying extra $000's in tax. Great! But, only to miss out on some great stocks that would have doubled my money in the meantime, making me FAR MORE than I in fact saved!

Sorry not any more! I am out there to make money & if tax becomes an issue - my super fund wins out!

2] Back to leverage! Nightstalker, I have taken my strategy with TOX, not to convert now & gain a paltry 1 cent, but to leverage & buy MORE units & hold till end Jan (target price then for TOX = 20 cents). I did a small spreadsheet with your figures of 2million @4 cents:

Option 1: 2,000,000 @0.04 = $80,000; End Jan worth: @0.20 = $320,000 profit. If TOX does no better & you hold for another 6 months, you make $320,000 profit b/tax; after 50% reduction on CGT you clear $256,000; But lets assume TOX goes to .30 cents in that time (very likely) you sell now = $416,000 after tax profit. Very good!

Option 2: sell 2,000,000 now @0.14 ave & buy 2,666,667 TOXO @0.105 ave (this is worst case, I bought mine ave 0.10 cents!) You gain leverage of an extra 666,667 options. Then: hold till end Jan, convert & sell @ 0.20 - Result: End of Jan I am sitting on a profit of $373,333 b/tax, or $224,000 after tax ($32,000 less than you at same stage). HOWEVER, while you have to hold your TOX till your 12 months are up, I can now choose anyone of three options:

Choice 2.1] I can choose to hold onto TOX for 12 further months, pay full CGT of $80,000 on only my FIRST sale of TOX & pay 50% LESS on my leveraged purchase. The end result is I pay roughly the SAME CGT as you, but have 666,667 MORE shares than you in the end! Rated: Conservative!

Choice 2.2] I can choose to sell at the end of Jan and be up for FULL CGT. I clear $224,000, $32,000 less than you, but I have 5 months to invest in opportunities that come along & easily surpassing the $32,000 extra I will be up for! Rated: Risky, but potentially a wealth-maker!

Choice 2.3] I can choose to hold onto TOX for another 5 months, with a target price of .30 cents plus! (the same as you). Then before end of June I sell (all or part of:) 2,000,000 @ .30 & transfer profits to my SMSF. Result: With only 15% tax I see a profit of $ 560,000. BUT stays locked in our super funds!

If I wish to hold more funds for trading & investing, I can also choose a combination 50/50 of both choices, pay more tax, still be in front, but have less cash locked in my super & more cash to trade with!

Summery: I know everyone is different; we have different strategies, goals, risk-tolerances etc. & in the end if we are in front, then we are ALL winners! BUT, there are many ways to skin a cat, and some are better than others!

Cheers all