1c Today Hidden Gem Uncovered, page-51

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djenrod

143 Posts.

25/11/17

11:24

Post #: 29110832
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Originally posted by Aussierat ↑

Heads are fully paid shares LRS
Options - are an option to buy heads in the future with an excercise price and closing date LRSOB
Excercise price 1c
Excercise date 12/10/2019

You can trade options like a head up to the excercise date.

Options trade at approx 50% discount to heads when options are not in the money - Options not in the money means lower than the excercise price.

Example of gap reducing with heads and option
Heads trading at 1.2c
Option trading at .006 (excercise price 1c)

As heads increase to 2c, options at 50% discount = 1c - now in the money as excercise price.

The heads go to 3c, option now 1.8 - less than 50% gap

The heads goes to 4c - options now 3.5c

The options give you more growth in this example as-
- You could buy more shares as half the head price
- The gap (50%) reduces as the heads increase well past the option excercise price

You need to be careful with buying options when the excercise date is close, you can get caught with expiring options and the cost to excercise is to high based on head value - example

LRS share is .008
The option at .002 as the excercise date is 1 month away.

Your cost to buy option .002, plus 1c excercise price = 1.2 - you can buy heads at .008

Buy options with a long lead time and if you believe the heads will increase adding value to the options.

Or buy options at a real low - greater gap than 50% because the excercise date is close 2-3 mths.

Very dangerous, but can do exceptional.

RMX as example
Heads at 1.2
Option at .003 with excercise date 8 weeks away.

I bought options at .003, sold at 3c 4 weeks later

Expand

Thanks Aus, interesting examples. Was RMX exercise price 1c also on that, thus risking 1pip loss if it remained as it was?

LRS Price at posting: 1.0¢ Sentiment: Hold Disclosure: Held
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0 Great analysis

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Last 20.0¢		Change 0.010(5.26%)		Mkt cap ! $560.2M

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1c Today Hidden Gem Uncovered, page-51

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