Forum Archive Index - January 2001

["Philip Robinson" <pcr@ihug.co.nz>]

Veronica,

 

Option are used by people for a number of uses. If you are a long term investor and you want to buy Infratil you will probably just buy the shares. But if you want some leverage from a good price increase you can buy options. Eg. If the options were $1 option and Infratil was trading at $1.10, the options would be 11 or 12c depending on the prospects, but if Infratil went to $1.50, then the options would move to 50 or 55c or whatever, if bought the shares at $1 and they went to $1.50, that's only a 50%, return, but if you bought options over the same shares for the 10c and they moved to 50c then that is 5 times your money 500%. It is leverage, just like a house mortgage.

 

Traders and others use then heaps, long term investors use them if they can get the underlying shares cheaper than buying them outright.

 

Hope this helps

 

Phil

 

----- Original Message -----

From: Veronica Ryan

To: sharechat@sharechat.co.nz

Sent: Sunday, January 28, 2001 8:04 AM

Subject: [sharechat] infratil options

I have just found out that infrastructure & utilities (ift) have issued options

Does anyone have any information on these?

Maybe it would be good to chat about options so small investors like myself can learn and understand more about options.

Where do I go to find out what is going on about options?

Will the issueing of options lower the price of IFT shares?

Are they a good buy?

Should one sell IFT and buy options?

Athol