set to rise 40% today, page-12

Nipples,

There are many different types of options so it's best to do some in depth research. The AZXOA options give you the option (right but not obligation) to purchase an AZX share at the strike price of 20c. So for every AZXOA you purchase you are able to buy an AZX share for 20c until the expiry date in Feb 2012. With this being said the price of AZXOA should be roughly 20c less than AZX.

The benefit of these options is the leverage they provide to a rising share price. for example, if AZX is currently at 45c and AZXOA is 25c and you purchase $10k of each then if the AZX price rises to 60c, AZXOA should rise to at least 40c (60c-20c strike price). You have made a 33% return on AZX shares (60c/45c) but the leverage of the options has made you a 60% return (40c/25c) over the same period on the same amount of money invested. For this reason the options normally trade at a premium meaning that the gap between the share price and the option price will normally be much lees than the strike price.

Best to grab some books or look on the net to make sure you're 100% comfortable with how these work before you start playing with them..