Ah perfect - makes so much sense now. And I really appreciate...

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Cs9118

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19/01/18

18:33

Post #: 30426232
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Originally posted by Aussierat ↑

Buying options versus Heads (Heads are fully paid shares)

Companies release options to investors and holders of shares, recently TV2 released options to holders and that is why TV2O is a traded (just like heads)
What is the difference between heads and options? – Option have an exercise date that the holder must sell the share on the market or exercise the option to buy heads before this date. There is an exercise price for each option (example 1.5c)
What is the exercise date: 30^th March 2019
What happens at 30^th March 2019: Any shares not sold or exercised will be worth nothing after this date.
What does exercise means: Exercise means pay the exercise price to the company (1.5c as per example) per share before closing date.
What is the total cost: Your initial investment price to buy the share on the market (1c) and the exercise price 30th March 2019 is 1.5c = 2.5c per share
Can I buy the share on the market at 1c and sell if the options reach 2c in a month or two: Yes, you can trade the option on the market the same as heads up to the exercise date March 30 2019. You do not need to exercise the share to get the value.
Why do traders buy heads: The option normally trade at 50% discount to the heads, therefore by buying options you hold more shares for your dollar spent. This adds value if you are buying a share at today value and exercising the option to change to heads in the future. Also as the option reaches the exercise price (as the heads go up) the 50% gap between the options and heads lessons.
Example XPE earlier this year
Heads: 3c
Options 1.5c
Buy $5000 of heads versus options.
Heads = 166666 shares
Options = 333333 shares
Today the heads are trading at 7.3c = Value today $12,166.61
Today the options are trading at 5.5c = Value today $18,333.31
Investing the same amount of money, you have gained $6166 extra
WHY IS THIS ACHIEVABLE?
The options reduce the gap between the heads and options as the heads increases dragging the value up in the option until it reaches the exercise price, once an option reaches the exercise price, the options are classed as heads (equal to each other) – Therefore the gap reduces from 50% and in some cases only 5-10% behind the heads. Buying options in XPE allowed you to get more shares for your $5000 and equal value after the share price increased to make the options IN THE MONEY

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Ah perfect - makes so much sense now.
And I really appreciate your thorough explanation - cleared up a lot for me!

Cheers!

CTM Price at posting: 0.9¢ Sentiment: Buy Disclosure: Held
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Last 46.0¢		Change 0.005(1.10%)		Mkt cap ! $228.4M

Open	High	Low	Value	Volume
46.5¢	46.5¢	45.0¢	$14.37K	31.00K

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0.465	14995	1
0.470	30000	3
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