oexo options a bargain and way undervalued, page-93

Look at the title of this thread. OEXO options a bargain and way undervalued. That's turned out not to be the case. Something that needs to be factored in is risk. Sure if the shares go up the options go up more as a percentage but similarly it works the other way.

Here's a few thoughts on what I think happened. None of it has anything to do with the company or viability of the project.

a) The converting of options to shares

So maybe someone had a few too many options say purchased at $0.04 and wanted to reduce their risk by selling some. But they were "undervalued".

It takes a few days to convert options to shares. You need to draw a cheque post it to the Oilex or their share registry and then you get the shares.

The first announcement of options converting to shares was on the 31st. So the investor probably made the decision on the 29th. At that time the shares were $0.21 and the options $0.045. Do you sell the options and make a profit of $0.005 per option? Or do you convert to shares and make a profit of $0.02 per share.

In this case they had 1,000,000 options. So maybe they borrowed that money, or maybe they couldn't really afford it and wanted to sell immediately. They are then prone to what people are offering. They dump the shares and drive down the price.

This then spooks the UK, in addition to the announcement which snowballs and drives the ASX down as well.

It could even be someone looking for arbitrage that just bought the options at $0.045 with the intention of making the $0.015 profit.

I considered reducing my risk by selling some options. But I couldn't bring myself to lose that $0.015. I investigated the option of converting to shares but with the delay, and this close to the announcement I decided it was too big a risk to take.

Best course of action is to hold true and wait for the announcement.

b) Not having the cash to convert options to shares

Let's say the results are good and the share price jumps to $0.30 but the options are stuck around $0.13. You have 1,000,000 shares, you're confident the share price will only improve or stay steady and you want to cash in. You could sell 100,000 options @$0.13 and have $13,000. You scrounge around another $2,000 and send a cheque to Oilex for $15,000 saying you want to convert 100,000 shares. You sell them for $0.30 and this time get the extra $2,000.

Now you've got $30,000. You sent it to oilex and convert 200,000 options. etc

You get the picture.

There shouldn't be anyone that can't afford to convert options to shares.