Welcome Bestman, By purchasing an option (which can be bought...

Welcome Bestman,

By purchasing an option (which can be bought and traded and fluctuates just like a normal share), you buy the right to purchase a share at the strike price directly from the company, regardless of the future price. The option has an expriy date though and can not be exercised after this date, and you forfeit your funds.

The expiry date on SUDOC is 31/07/2020, and the exercise price is $0.015, so that means I have to pay 0.015 for every option I own, if I want to convert it to an ordinary share.

e.g. - you buy 100,000 SUDOC options at 0.005 cents (cost $500, 100,000 x 0.005), if you do not exercise these options before the expiry date you forfeit your $500, but you can sell these options at any time to another person prior to the expiry date and/ or exercsing them.

In January 2020 the SUD share price is 10c, and you decide to exercise your options, this costs you $1,500 (100,000 x 0.015), which you must pay directly to the company. So the total cost to you has been $2,000, or 0.02 per share, however you now have 100,000 oridnary shares (or heads) with a value of 10c each, or $10,000, your profit is $8,000, but only had to outlay $500l, today, and $1,500 12-18 months later.

The value of the options will increase with the share price too, but can increase in risk the closer you get to the expiry date, if price going backwards, however in the above scenario the options would likely be worth about 6-7 or even 8 cents, in January 2020, as people can pay 6 cents for the option, plus stricke price of 1.5 cents, so total of 7.5 cents for a 10 cents share.

Hope that helps