I never use it for mining stocks as market sensative announcments for miners have a far bigger effect on the volatility (beta) of the share price and causes bigger outliers than for industrials so this formula tends to undervalue mining options IMHO.
Simply If the shareprice is lower than the exercise price of the option close to when the options expire then there is less potential for the option to "get into the money" so it will trade at a lower value than if the exercise date is far out in the future.
If you feel the shares will trade closer to the NPV of LL plus the value of the other tenaments then the oppies are a good way to go but just remember if they are out of the money at the expiration date they are worthless. Also if you want to own the underlying share you need to be able to come up with enough cash before the expiration date to convert if you dont want to trade the oppiies instead.
I have around half my shares in oppies and half in fully paid shares with EVG.
EVG Price at posting:
12.0¢ Sentiment: None Disclosure: Held
