Companies issuing loyalty options

[sleeper88]

Hey everybody, its a new year so i'd like to start this new thread. I want to generate a list of companies that are going to issue loyalty options to shareholders. ok enough said, i'll kick this off

USA - just announced today, 18th Jan is the record date, free 1 for 2 bonus issue with exercise price @ 25c
FAS - within 4 months of listing, 0.5c per option with exercise price of 25c
NTU - within 6 months of listing, 1c per option with exercise price of 25c
BCN - within 3 to 6 months of listing, 1c per option with exerices price of 20c

 

[Kauri]

What exactly does "loyalty option" mean??

 

[bvbfan]

I think its to keep IPO holders in the stock for 3-6months and give them a benefit by granting these options

CYL did one in December

 

[Crash]

So to use the BCN example of
BCN - within 3 to 6 months of listing, 1c per option with exerices price of 20c

What exactly does this mean? If you hold the stock after the listing for 3+ months they sell you an option for 1c that is worth 20c at the time of issue that trades seperately to the regular shares?

 

[clowboy]

you an option for 1c that is worth 20c at the time of issue that trades seperately to the regular shares?

No,

The option trades seperatley to the share but it's worth is dependant on the price of the underlying share (and a few other small factors).

In this case if the share price is trading below 20c then the option is worthless, if it is trading above 20c it is "in the money".

If say the share was trading at 30c then you could excersise your option (pay them an additional 20c per security), take ownership of the shares and then sell them on market for 30cps.

Ignoring cost you would have made 9cps, so while the share price has gone up 50%, your option value has gone up 900%.

 

[finnsk]

No,

The option trades seperatley to the share but it's worth is dependant on the price of the underlying share (and a few other small factors).

In this case if the share price is trading below 20c then the option is worthless, if it is trading above 20c it is "in the money".

If say the share was trading at 30c then you could excersise your option (pay them an additional 20c per security), take ownership of the shares and then sell them on market for 30cps.

Ignoring cost you would have made 9cps, so while the share price has gone up 50%, your option value has gone up 900%.

How do you get the figure of 900%? You paid 20cp and sold for 30cp

 

[YOUNG_TRADER]

How do you get the figure of 900%? You paid 20cp and sold for 30cp

This sorta question belongs in the derivative thread, but anyway


If you hold 100,000 shares in say CYL (I actually did)

They did a 1:2 rights option issue for 20c options costing 1c

ie I was offered the right to get 50,000 options @ 1c each or a total of $500

Anyway as theyre 20c options, they only have real value when the SP is above 20c,

Today CYL is around 32c so opies trade at 12.5c

Meaning the opies I paid 1c for are now worth 12.5c = 1250% Gain,

But then I did have to hold the shares to recieve the rights, but in this instant I was able to sell my Stock which I paid $25k for (100,000@25c) for $30k (ie 100,0000@30c)

With the $5k profit I made on the shares I purchased another 50,000 options on market at 10c= $5k

So now I hold 100,000 options which are really free when you look at it, but are worth $12.5k

 

[YOUNG_TRADER]

And before anyone thinks wow what a great play I should probably let you know that when I was doing this CYL rights issue play, I had a choice between CYL and CZR,

Both were going to do a 1:2 Rights Issue for 20c opies, Both had an SP around 25c at the time

However CZR are today at 70c-75c and they're opies are at 50c-55c


Now that would have been a damn nice play!

Oh well

 

[alankew]

YT if in this instance my MRUO are worth 47c but the shares are worth 70c I presume the options are at a 3c discount so what is the best thing to do?

 

[YOUNG_TRADER]

Alan, sometimes stocks run so hard and fast that the options actually lag their actual value and trade at a discount,

Be patient with MRU, it's got a way to go yet

 

[wintermute]

VPE is issuing loyalty options at no cost at the end of January....

from the announcement of 27th Oct 2006. Note that the consolidation was approved and the options are being issued...

Note that subject to the capital consolidation of the Company being approved by shareholders,
the Company intends to make a pro rata issue of free bonus options to shareholders on the
basis of one free bonus option for every four shares held on 31 January 2007. It is the intention
of the Company to list these free bonus options on the ASX subject to the normal ASX
requirements.
The free bonus option will be issued at no cost to the shareholders, and can be exercised at any
time over their three year life at an exercise price of 25 cents. The issue of these free bonus
options is intended as a reward for the loyalty of shareholders to the Company.

Tony.