I seemingly like a number of others in this forum have seen great opportunity with the options as a comparison to direct share ownership. Whilst I agree that by all rights you would expect the options to trade at a premium to the share price less the strike price I just wanted to ask others opinion on three other factors why this might be so.
1. a lack of depth could mean that within 1-2 weeks the options are either at least double or worth nothing and almost unable to be traded. Despite current positive indications is this too much of a casino like investment for some people. The lack of depth also restricts some from being able to accumulate portions of the size they would like
2. Some fund managers have restrictions in relation to being able to buy options at all. As such whilst I would never suggest that the options trading is not subject to manipulation, it is a reflection on trading by individual investors predominantly and unfortunately I would suggest that the average investor may not be too aware or inclined towards option investments.
3. If we experience a CR as some point (which seems likely in some capacity) correct me if I am wrong but option holders will not get the same potential to avoid dilution that share holders will through offerings to increase their holding. As such whilst the options offer a great leverage play with limited loss of capital they also miss out on some of the advantages of direct share ownership.
what are others thoughts?
OEX Price at posting:
19.0¢ Sentiment: Buy Disclosure: Held