mmmm.... bear with me.....really.... I was having this...

mmmm.... bear with me.....really.... I was having this discussions with my friends a few weeks back and we couldnt agree either how it works....I havent bought options, because I couldnt get a clear understanding how they work....
In your example .... Mister X has paid 5c for his 1000 X options to buy LRS shares say 6 months ago. At some point he decides he wants to exercise his options, Doesn' t he at that point pay the company the 1.2 cents to convert his options to shares...
If you go to the LRS web site - there is a form you complete which seems to support that notion. So in total yes he has spent 6.2 cents

So I get that if the share price is less than 6.2 cents when he exercises his options, he is losing some money out of the combined transactions, but as long as the share price is above 1.2 cents he should still exercise the options to reduce the losses ?

For example if the share price is 4c - your saying he shouldnt exercise his options and he loses the 5c that he spent on the option.

but Im saying he should pay the extra 1.2 cents but then he has a share worth 4 cents (which he could sell) so his net cost is 5 + 1.2 - 4 = 2.2 loss

thoughts ?