Forum Archive Index - February 2000

["John H T Wilkinson" <jhtw@clear.net.nz>]

Thanks David & Steve for you comments.

David -  you stated that options carry more upside than the Head Share, and

Steve - you provide a scenario to show a magnificent gain:
                The Head Share moved by 32¢ - up 53%, while the Option moved
by 48¢ - up 218%.

Frank Newman's scenario shows the Head Share moving by 45¢ - up 18%  and the
Option 10¢ - up 50%.

That explains the "Upside" factor for the number cruching viewpoint.

What I want to fathom is what is the rational for the option's market value
to increase to 70¢, particularly if you are approaching the call date.
Who would want to pay 70¢, or maybe a bit less, for the option when they are
due to pay 70¢ for the call?

Is the rational more of a gamble:

            being prepared to loose your investment on the chance of making
a killing,

            as opposed to loosing the same amount on the chance of a smaller
gain,
                  but still being in there past the call date if returns are
further down the track?

John




-----Original Message-----
From: Steve <sljames@voyager.co.nz>
To: sharechat@sharechat.co.nz <sharechat@sharechat.co.nz>
Date: Thursday, 10 February 2000 18:35
Subject: [sharechat] NOG/NOGOB


>John
> Head Shares
>                   Buy  NOG    5500@60c = $3300
>                   Sell  NOG     5500@92c =$5060     Gain = $1760
>
>                  Buy NOGOB  15000 @ 22c = $3300
>                  Sell NOGOB   15000 @ 70c = $13,800    Gain =$10,500
>
>The leverage options provide  = $8740
>
>Steve
>
>
>
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