Billy
Not addressed to me but in answer to your question, I will attempt to give you an answer. It is a complex subject and I will attempt to explain the mechanics. The details will probably be forwarded by "knox".
Companies raise money by selling stock. When they run out of money then issue more shares, usually in the form of options or private placements. The options are given to directors, employees, promoters etc at a price determined by the exchange, usually based at a discount of 20% of the average price for the previous 10 trading days.
The recipients of the options sell them, and when they do, the company gets the cash at the option price, so the Company doesn't really care how much the owner of the option sells them for., (the directors and employees, however, may not see it that way if they own the options.
The Company is guaranteed the price of the option; the recipient trys to sell higher (TO YOU), like much higher so he or she can afford to buy the option and make a profit.
The option date means little when one tries to figure out when the action will occur, unless there is a hold period of 12-18 months, as in private placements and because those that hold the options may pre-sell the stock before the date to exercise the option is due. (Go short and cover later with the options).
It has also been said, that sometimes, a person with a large short position, will rescue the comapny, by buying a private placement to get stok to cover his (or her) short position.
It is all a game. For example the following means that those who have the options can exerciose them any time from Nov 18,1996 to Nov 17, 1997. However, there is no guarantee that options have not been used on Nov 18/96 to cover a short position entered at a higher price a few weeks or so before.
United Compass Resources Ltd
UCR
Shares issued 13612899
1996-12-17 close $0.63
Tuesday Dec 17 1996
Options Granted
On November 18 1996, directors and employees have been granted options on
210,000 shares at $0.75 expiring November 16 1997.
Complex, but it happens.
Ed |
