Hey mate,It’s the leverage. 3 years til expiry, the main risks...

Hey mate,

It’s the leverage.

3 years til expiry, the main risks are :

- SP doesn’t exceed 28c + purchase price, before they expire. When they expire, they disappear.
- No funds to convert the options. Given that these options are listed, liquidity is what would actuallybe important (as you can sell the options without exercising them).

So, if I have $14k to invest, I could buy 100k heads @ 14c, or 270k options at 0.052.
(I actually bought most of my options a lot cheaper, just FYI).

But based on the numbers (let’s assume options are lagging the heads by 30c, as they typically lag by the exercise price).

That means when heads are $1, options would be 70c.

- 100k heads = $100k ($86k profit Pre-tax)
- 270k options = $189k ($175k profit Pre-tax)


Hope this helps.

I usually like to have some heads (which I do, in LCK) that I can use to cover the costs to exercise the options, if I need.


Cheyne