RE:Question re Expiring Options - Insider trading strategiesquakes99 wrote: Here's a question for the sophisticated investors who deal with stock options, their associated taxes, and strategies for laddered exercise prices...
Between now and January 21st there will be $3.4M worth of Options and Warrants that will expire, as per the table below:
| Options | Exercise $ | Number Vested | Expiry Date | Vested $ | Outstanding $ | |
| 27,500 | $0.39 | 27,500 | 12-Jan-15 | $10,621 | $10,621 | |
| 349,375 | $0.64 | 349,375 | 14-Jan-15 | $223,146 | $223,146 | |
| 1,140,000 | $1.20 | 570,000 | 14-Jan-15 | $684,000 | $1,368,000 | |
| 800,000 | $1.65 | 200,000 | 14-Jan-15 | $330,000 | $1,320,000 | |
| | | 1,146,875 | | $1,247,767 | $2,921,767 | Total Options |
| | | | | | | |
| | | | | | | |
| 1,585,000 | $0.30 | 1,585,000 | 21-Jan-15 | $479,938 | $479,938 | |
| | | 2,731,875 | | $1,727,705 | $3,401,705 | Total Warrants+Options |
It is very likely that the option holders will exercise those this week, so we should see some Insider Transactions appearing on SEDI and CanadianInsider. They will generate $3.4M of income for FCU next week... a small financing to help pay for more drilling. ;-)
My question is... given that there are $42M in other options and warrants at a wide range of exercise prices (as per the summary posted on the Fission website), how do insiders play that in order to raise enough capital to pay for exercising those options? Do they employ a strategy of exercising the lowest price options, selling those and using the profits to exercise the more expensive ones (rather than holding them until a buyout)? And what about the taxes generated along the way? What are the odds that they will all get exercised? $42M is a lot of cash to raise!
I'd just like to get a feel for how many of those outstanding options and warrants might now be exercised sooner rather than later, resulting in a significant cash flow that will cover all our costs to continue proving up the resource, contracting out the Preliminary Economic Assessment, and preparing legal team for bid negotiations, etc. If that $45M cash bonanza takes place then that will be the end to further dilution through financing.
Thanks for any insights from the professionals out there. Hoping to learn more about how options are played. Cheers!
Hi Quakes,
I have exercised quite a few stock options in my day. It is very easy to do. The employee does not need to supply the purchase price money. Generally, the vested options will appear as exercisable in the employees trading account. This account would have been set up by the company. When you exercise the options, the broker will calculate the difference between the sale price and the purchase price and deposit that cash directly in your account. This money is taxable as a capital gain. The broker will take care of receiving the shares from the company, sending them to whoever bought them on the market, and providing the purchase price funds back to the company.
Thus, there is no real trading strategy required from the insider or employee perspective.