whats the catch??, page-17

Hi bugeye,

You own shares, 10,000 of them.

In addition you also own the _OPTION_ to buy 8,000 shares at 20c. This option expires in 2012.

You also own the _OPTION_ to buy 8,000 shares at 25c. This option expires in 2014.

So if you exercise both sets of options in full you will spend 8,000 x 20c + 8000 x 25c = $1600 + $2000 = $3600
and you will have 10,000 + 8,000 + 8,000 = 26,000 shares.

An option is a binding agreement the company has entered into to sell to you a share, for a certain price. You don't have to buy it if you don't want to, but you can.

Because there is no obligation on your part, and the shares may rise in value in the future, each option is worth something - at least as much as the current share price minus the strike price.

So for example, a PXGO has a strike of 20c. The current share price is 25c, so each PXGO should be worth at least 5c.

Cheers