At $.145 it does not end up being the same investment:
Scenario 1: Buy $10,000 worth of shares @ $34.5c = 28,985 shares Sell 28,985 Shares in 2yrs for $2 = $57,971 Profit = $47,971 ROI = 479%
Scenario 2: Buy $10,000 worth of options @ 14.5c = 68,965 Exercise 68,965 Options in 2yrs for 20c = $13,793 Sell 68,965 shares in 2yrs for $2 = 137,931 Profit = $114,138 ROI = 479%
Scenario 3: Buy $10,000 worth of options @ 14.5c = 68,965 Sell 68,965 Options in 2yrs for $1.65 = $113,792 Profit = 103,792 ROI = 1,037%
The options scenarios make the following assumptions: *The same amount of "upfront" capital is invested - it assumes that you are long and will invest $10,000 into the opportunity now. *Scenario 2: you would be willing to invest another $13,793 into an option that was deep in the money to get the guaranteed profit. *Scenario 3: selling these options into the market just prior to expiry may not be an option. These are not vanilla exchange options, so there is no market maker and there may not be any buyers when the options are so deep in the money.
Scenario 3 is the optimum case, but because there would likely be no counter party to sell to, you would likely need to use scenario 2 to exit the position. Scenario 2 is also superior to the base case as you will make significantly >profit without increasing the risk.
These scenarios are only better however if the stock price does indeed rise substantially.
If the price falls in the coming weeks and the options become cheaper, the leverage will increase. Currently the options implied volatility is very high, because of the companies 2023 operations timetable. We are expecting drill results most months this year and will the political agenda T92 could be in for a wild ride!!
Hopefully this explains how the options work
T92 Price at posting:
33.0¢ Sentiment: Buy Disclosure: Held
