why no interest in the oppies, page-20

I use the term "in the money" to mean the heads price is greater than the exercise price of the options (eg a 20c ex option is "in the money" at 21c but not at 19c.

Basically if an option is not "in the money" at the time when it has to be exercised it is worthless as it is cheaper (and easier) to buy the heads than exercise the option.

The significance is that if you for example buy a 20c ex option for 20c with heads price of 40c and the heads price falls to 20c or below you lose 100% of your investment.

If you buy a 20c ex option at 10c and the heads are only 18c then you need the heads to appreciate to at least 30c just to get your money back if you hold them to the exercise date.

The real value with options is when there is a longish expiry and plenty of prospects for the SP to go up prior to then. In that circumstance you may be able to make a >300% profit for only a 50-100% increase in share price, particularly when the increase on heads takes them from being out of the money to being in the money.

Such a situation recently was present with FNT. Heads were about 12c, 20c ex options about 2c. When the heads flew to the mid 20s the options went to about 6c (maybe 8c, can't remember) so the smart traders made a 300% profit with only a 100% increase on the heads. I unfortunately bought them after they had fallen back to 4c/18c heads hoping for a repeat and then subprime blew my hopes out of the water. I'm now a little nervous about that holding as liquidity is poor and expiry date in November with options now 8c out of the money. However if it had come off I could have made a 400% plus profit if the heads had marched back up and went to about 35c. You ar always taking a big gamble for high rewards with options.

Now when you multiply options high risk/high reward by oil/gas high risk/high reward you really have a potent combination - some are possible 100 baggers if you get them early for a few cents but you are much more likely to lose your money so only bet what will not hurt (too much) when you lose it (oil/gas specs are is just that - a bet - though much better risk/reward odds than at the track). I've never had a hundred bagger though I've had many multi-baggers.