Replies to post #257526 on Anavex Life Sciences Corp (AVXL)

[imho]

I think LPC takes their 80,000 shares which is their commission for these transactions and sells them immediately and collects their approximately $400k. When Anavex wants to sell some stock and collect the cash for that sale they put the stock to LPC and lpc sells it immediately making either pennies on the transaction or may be losing pennies on the transaction but either way their money was guaranteed with the 80,000 shares that they received as a commission.

Well that is one possibility. I am assuming, Anavex or LPC do not know the results at this time. But if I was LPC, this is what I would do: buy 800 put contracts at price parity, i.e $5.00 strike.

So LPC carries no risk at all. If the news is bad, their 80,000 shares are still worth $400,000 because of the put. But if the news is good, and say the AVXL stock goes to $10 or $20, ... they make $800,000 or 1.6 million, etc. So did they buy puts? IDK. Slightly bullish if they did. Slighly bearish if they didn't.

From Anavex point of view, and as many have pointed out, this is a more favorable position to be in if the news is bad and the stock suffers. If the news is good, obviously this is very good for Anavex.

The cost to Anavex is the 80,000 or so shares. Not a bad deal. Bottom line we still don't know the trial results at the time of the deal.

IMHO