I assume the volatility on average is about 75%, if the underlying share price is $1.00 exactly at expiration, on investing $50K buying the LO options at $0.16 a piece today, then accounting for the Piggies...I will make a theoretical profit of $126,100, that's roughly $76,000 MORE than the shares over three years! (ie you could buy roughly 100,000 shares for $50K at roughly 0.50 a share, these would go up by $0.50 to $1.00, so 50 cent profit x 100,000 shares = $50K profit. Option profit is 126.1K so $126.1 - 50K = 76K greater profit on options).
Now that is a decent leverage proposition (though granted, there is additional risk, ie if the share doesn't go up then the options will be worthless at a given point (you can see that in the table))...though, as @oxxa23 said, at least you'd have some kicking and writhing of the share still but the option would be dead.
The next thing I did was plug it into a chart to see the relationship as the sp goes up in 50 cent increments as can be viewed in Hunter2's table, it's linear after the $1.00 point (labelled as 100 on the x axis, denoting cents). The below based on σ = 75%.
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)