Media Thread, page-943

time and leverage are different.

if the imuob option (4cent exercise) was due to expire in 2 days and heads share price was 20 cents then the imuob “should” be 16 cents. No time premium allocated.

However you could still buy the option if you knew or suspected an announcement was due the next morning.

If the next morning the heads rose to $1 on the announcement (500%) then the imuob option would now be worth 96 cents (600%). This is leverage , meaning as the head rises the underlying option follows and therefore rises at a greater percentage.

Premium is just what you are prepared to pay over the “natural” price of heads price minus exercise price and this will be made up of a combination of your sentiment about the future of the stock ,the time left on the option and attraction of the leverage afforded to the option.

hope that makes sense. I’ve had a couple of ambers.