Options are fairly straightforward.
You buy them at a discount. Great for leverage because if cash flow is tight, you can buy more of them.
Example MGT is currently 2.6 cents per share. So if you had $10,000 to invest, you could purchase 370,370 shares.
MGTOD options are currently 0.5 cents per share so for your $10k, you could purchase 2,000,000. You can trade them as you would with any shares but they expire in October.
In order to covert them into full shares, you need to pay the strike price which is 5 cents per share before the October expiry. So based on the example above, you would need to pay $100,000 to convert your 2 million options to shares. This money goes straight to the company to help fund the business.
The advantage in options is that you can take a substantial position at a cheaper price. In the case of MGT, you are also reducing your risk profile because you are outlaying less up front and by October, we will have a completed PFS. If the PFS is strong, there is a very good chance we will be well above 5 cents a share. If the PFS is a fizzer (which we are very confident it won't be), then you won't feel as bad about losing that money.
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