16-Nov-2021: 3:50am: What the heck am I doing? I should be asleep!! OK, to @Billow, in reply to your "##advice" straw for Lake Resources (LKE). You said, "I have some Lake Resources Shares (RL as well as Strawman) and saw in my Commsec account today 2500 Lake resources options (expiry June 2022)

What is the mechanism for dealing with them? If I convert them to shares, does that mean I pay the difference between the option price and the share price, if I sell them can I do that through commsec in the same way as shares, or is there another mechanism needed?"

OK, first off, have a read of this 05-Nov-2021 announcement from LKE. Click on the link (the underlined blue bit) to open that announcement in a separate tab in your browser. They described the new options as "1-for-1 unlisted Additional Bonus Options (86,094,394 options), with an exercise price of A$0.75 and an expiry date of 15 June 2022." Furthermore, they added that they intended to make application to the ASX to have those options listed. That application was subsequently made, and was successful, and those options are trading now with the ticker code LKEOC.

LKE shares closed yesterday (Monday 15-Nov-2021) at $0.975, and the LKEOC options closed at $0.37 each, which is a good price.

Each LKEOC option gives you the right (but not the obligation) to apply for ordinary LKE shares at a price of $0.75 each. At the moment people are paying around $0.37 for that privilege, so they are clearly not planning to apply for those shares now; they would be holding the options hoping for LKE shares to go higher. To buy LKEOC options for $0.37 and apply for shares @ $0.75 would cost $1.12 per LKE share, and you could buy LKE on-market for less - their trading range Monday was $0.9675 to $1.025. However, if option holders waited and LKE shares were trading at $1.50 in May 2022, they could buy LKE shares for half of that ($0.75/share). The downside is that if the options are not exercised or sold by June 15th, they expire worthless.

So, you have three options as I see it:

(1) You can sell the options (any time between now and June 14th 2022) just as you would any share, using Commsec, just make sure it is LKEOC you are selling not LKE.

(2) You can exercise your options - either some or all of them at any time between now and early June 2022. The LKE share registry will either email you or post out to you an application form that you can use to exercise those options. You should have already received it, or it could still be in the mail, give it a week and if you still haven't received the form (which is sent out to all option-holders automatically), chase it up through the share registry. LKE's share registry is Automic. You can email them at: hello@automic.com.au or you can use their website: Automic Registries Investor Portal

This information is from the LKE website: My Shareholding - Lake Resources

The form will likely have two options, with the easiest one being to BPay the money - in which case you would not have to return the form, or to return the form with a cheque - but who uses cheques these days?

Obviously the higher the LKE share price is (above 75c), the better the deal is - to exercise the options @ 75c each.

(3) Wait and see what happens to the LKE and the LKEOC share/option prices. Just remember to NOT let the options expire worthless (on June 15th 2022). If you don't exercise them, just sell the options on-market instead, then at least you'll get some financial benefit from them. Also, when exercising them, allow a few days for your application to be processed. That's why I said early June, not mid-June - at number (2) above.

To answer your specific question, no, you don't pay the difference between the option price and the share price, you pay 75c/option to convert them to LKE shares, and the difference between 75c and the share price of LKE at the time would be the gain you would make, assuming that the LKE share price doesn't drop during the period from when you applied to exercise the options and the time the additional LKE shares (from the exercised options) are issued to you (which should be no longer than a week or two). All options have a set price at which they can be exercised, and you usually have to trawl through the company announcements (as I have) to find out what the exercise price is for those particular options, or read it off the form they will send to you.

Hope that helps.

John.