Pertinent to SGF sp and volume actionThis post is borrowed from the TEL bb. The numbers (regarding flow throughs, etc.), are from the TEL stock. TEL has undergone numerous rises and falls of its sp recently, with heavy volume moving into a nr, and heavy volume and selling right after the news, as we've seen numerous times with SGF in the past. This explanation is worth sharing on the SGF forum, imo. The TEL stock is currently trading around .80.
$.40 cent flowthroughs are still available, and 100% profis are being taken on them. TD and Anon have been buyers in the $.75-$.85 cent range for 2 months (approx. 100% gain). The key is to replace your $.40 cent position with an equivilant number of shares at $.75-$.85; once complete, unload the $.40, book your profits, and pay your tax.
Here's how it works:
Say you have 200,000 flow thoughs (which come with $.60 cent warrants to purchase up to 100k).
200,000 x $.40 = $80,000
Buy 100,000 in the open market, ave price of $.80 = $160,000
Sell 200,000 flows at ave. $.80 = $160,000, after tax roughly $128,800 (sell them on news)
So, your innitial investment is $80k, plus the $80k at market = $160K - after tax profits of $128.8k = $31.2K
You now have 100,000 shares and 100,000 warants at a price of $31.2K PLUS the risk free option to acquire an additional 100K at $.60 or $60K = total of 200,000 at a combined price of $91.2 k. You have now reduced your total cost of ownership by close to $50K, and reduced your exposed risked capital. Not only that, but you've established a new tax entry point on half.
ANyways, it's done on all stocks, provided you can get product. Look at TVC this week; they just tripled their high grade deposit, now have one of the top 5 U deposits in the world, and pop-and-drop she goes (even though Sprott bought close to 50% of the trades this week). Short term moves can kill you if you're not a pro trader, so don't sweat it unless you no longer like the story (micro-macro economics behind it).
The key is that the higher volume selling occurs as a positive as opposed to a negative. Unfortunately, less experienced market players can tend to get emotionally attached to the swings and sell too early, or at a loss. Meanwhile, the base gets longer, the cheapies get fewer and the med-long term strength increases.
Back in 2001/2002 Denison (Denison Energy at the time) showed the exact same patterns. The thing is, it's difficult for most people to recognize when they've got a real big-time winner on their hands, as most have never had one. When you have had one or two, you tend to recognize it.