Trading options can be fairly simply, it provides better...

Trading options can be fairly simply, it provides better leverage and better possible rewards, but there are a few facts to be aware of. Following is my idea how options work and how trading options has worked and provided for me:

lets assume you have $6000 and you are willing to risk or lose this money buy you would like to make as much return from the money as you can. You then research and you find a stock that you think has great potential, in my case I have chosen MPJ...WHY??? the risk versus the reward for my $6000 is definitely worth investing here for if MPJ drills find a massive amount of resource commonly know as the mother lode then my $6000 will be worth much more than this.

If this resource is found prior to the options expiring, in this case MPJO expire on the  30th June  2016 so we still have app 8 months prior to them expiring and considering they are drilling now, then this time period I consider safe and a definite plus for buying the MPJO´s at this stage. This should be taken in consideration when buying options and is very important to consider when buying options (the conversion price and expiry date).

Trading company options v company heads

1,000,000 x .006 = $6,000 fully paid MPJ shares. Or
3,000,000 x .002 = $6,000 MPJO options

(remembering here the conversion price here is 1c so if you choose to convert you will need another $30,000 dollars bringing your total price of the stock after conversion to a total of $36,000) I personally have only converted options once for the options expired and the company had not yet found all the resources but in this case I paid the 1 cent conversion and the stock ran all the way to 12 cents for options I paid originally 1 cent for plus conversion 1 cent so a total of 2 cents total cost.

so looking now on the positive side with MPJ, IF we hit some great grades of Nickle and good quantities worth while mining or we hit the MOTHER LODE...then the risk v reward could be as the following, keeping it realistic.

1,000,000 x .05 = $50,000 fully paid MPJ shares. + $44.000 (then you have your own tax implications to deal with) Or
3,000,000 x .04 = $120,000 MPJO options  + $114,000 ( if you don´t convert)

here you have the choice sell the options straight out or pay to convert in this case total needed is $30,000, but I feel the only need to convert here is if there is no liquidity on the the options and you are placed in a no choice situation, then deduct this amount from the total, so now the situation is as follows.

3,000,000 x .002 = $6,000 MPJO options  + conversion = $36,000 so then you have 3,000,000 heads instead of options

3,000,000 x .05 = $150,000 - $36,000 total cost = $114,000 (then you have your own tax implications to deal with)

a good win win situation.

BUT!!! there is the other side where you do not have the money to convert or you choose to not convert and the options are about to expire, what happens there? with the heads you are safe and you still retain your money providing they are trading at the price you paid for them, with the options, normally as time gets closer to expire date the buyers drop off and most of the time you are placed in the situation of trying to get what you can or worst case scenario.... lose your $6,000. If you are confident, believe in the company, the geo´s etc and you choose to convert then your options now have cost a total of 1.2 cents each as apposed to .006c if you purchased heads only from the start, so now you hold 3,000,000 heads at a total cost of $36.000 and you hold and wait until if/when they hit some grades and you can re-coop your money if not some great profits.

This is all my own view, opinion, experience, understanding and again all people should do their own research and or seek professional advise.

Muss, thank you, I will take more care in future and show both sides, yes I was been optimistic and enthusiastic, but the news made me a little excited and the volume yesterday on the options excited me as it is today.  

Now MPJ , this would have to be the best Geo team in Australia at present....why????? we will know soon enough, with 40 km of potential strike, a big area but bigger possibilities as well. Another line wipe will send this into a frenzy.Good luck comrades, hope MPJ can bring us a little Christmas cheer.