10 cents here we come, page-18

buying an option doesnt actually mean u own any stock. it gives you the right to buy the stock at a reduced price when the stock has risen, assuming the share price rises. so what sydney is saying is that he purchased 10k worth of options at 0.002( price this morning). this gave him 5M options to be exercised by june this year. if by june this year the price is 10 cents like he suggests, he has the right to buy 5M shares at 0.002 and sell them immediately at the current market price. hence make a sizey profit, in his hypothetical case close to half a Mil. thats how an option works. In saying that im not sure what the exercise price is on this share, i think ive gathered its 1.5cents. after explaining all that and assuming the exercise price is 1.5c, if by june 2014 the share price is under 1.5c sydney will lose the entire 10k. Thats my understanding of this anyway, i was a little shady of it all so if anyone would like to correct me have a bang