How do options work exactly?

Whiskers said:

Sorry mate.

You needed to convert them before 30 Sept.

If their expiry date is 30 Sept they have expired... evaporated... nonexistant anymore.

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yachty7 said:

Re Converting;
Also a newby & have some FNTO options. How does one convert company options? eg I am not at my normal postal address & am wondering if a conversion form or similar has been sent there.
Thanks

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Febs said:

Hi guys,

I've got a related, but slightly different question which I was hoping someone could kindly answer. (I checked the other options thread but couldn't see a straight-forward answer).

I've recently bought into an IPO for MAV. Say I bought 10,000 shares, which included 5,000 MAVO options "exercisable at $0.20 at any time up to 30 June 2010".

The SP for MAV is currently at $0.34...so am I right in assuming that, if I wanted to, I could do the following right now?
- Exercise the MAVO options, at a cost of $1,000+brokerage fees.
- End up with $1,700 worth of MAV @ $0.34?
- Sell that $1,700 worth of MAV @ $0.34, for a profit of $700?

Alternatively, I could simply sell my MAVO for whatever the current price is?

Just want to make sure i understand the whole "exercising options" process, as opposed to actually buying and selling options.

Also, I'm assuming once exercised, I own regular MAV which I can treat as I would a normal share (ie: instead of selling now, I can keep for however long).

Thanks all. Probably a pretty basic questions, but I'm quite new to this.

Cheers,
- Febs.

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Febs said:

Hi guys,

Bit of an update to the above, and a new question.

There's talk of a MAV/MRU merger, which will give "1 MRU share for every 3 MAV shares" and "1 MRU option for every 4 MAV options".

The share deal seems fair enough, as MRU shares are approximately 3x MAV (currently $0.67 / $2.00).

However the option deal doesn't seem as good, as MRU options are only slightly more than 3x MAV options (currently $1.60 / $0.50).

Doing some basic sums, it seems if my MAV options were converted to MRU options, I'd lose out a bit.

So, assuming the merger does go ahead, would I now be better exercising the MAV options, so I have more MAV shares come conversion time?

(Assuming the current MAV:MRU and MAVO:MRUO rations stay the same, of course...)

Cheers
- Febs.

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