As a newbie to options, I've been following this thread with increasing interest (thinking I might buy some), then with increasing concern as the risks emerge, so I'd like to see if I understand how options work.
1. I buy 1000 (?) options for $1,000 which have a exercise price of 7.5 cents (or 8.0 cents according to whichever type) which gives me the ability to later buy 1,000,000 shares at whatever the SP is when the options mature.
2. On maturity, if the SP is lower than 7.5 I can either do nothing and lose my $1000, or convert and have to find $75,000 to buy shares that are worth less than $75,000 but which might go higher. OR if the SP is higher than 7.5, pay the $75,000 and either hold indefinitely, or sell as soon as they are transferred to my name and take the profit.
Please someone correct me where I am wrong.
Also, I've scanned the AGO website and cannot find anything about options. Are they purchased through AGO directly, or through ASX, or another third party? Could someone please supply the link to the shareholder request for paperwork that others have mentioned.
Thanks in anticipation for some clarity. So many of the posts assume knowledge that I don't have, but I'm doing OK with my regular share trading and want to branch out into more options (pun intended).
Gratefully, GW
Expand
