the capper's gone?, page-7

They're attractice because they don't expire until Dec 2013 and you can buy more of them with your cash.

Here's an example - say you had $10,000 to invest.

You could buy ~117,000 MNM or ~333,000 MNMOA.

You're basically placing a bet that you think the price of MNM in the future will be worth buying options.

If, for example, MNM went to 50c.

If you had bought 117,000 MNM @ 8.5c and sold them at 50c, you'd make $48,555 profit.

If you had bought MNMOA @ 3c, you could convert them to heads by paying $24,975 (333,000 x 7.5c ex price) and then sell those 333,000 heads for $166,500 making your profit $131,525 ($166,500 - conversion cost - initial cost).

You could also sell your 333,000 options on-market for the same profit, assuming MNMOA lagged MNM by 7.5c.

So you see, there is the advantage of leverage.

Of course, if MNM didn't get to a high enough price when you wanted to sell/convert you'd be worse off than if you had bought heads.

It's riskier but the rewards can be greater.