ann out tennant creek drilling, page-9

Boom Trader,

would you mind explaining to me how options work.
I have been trading now 5 years with shares, cfd's and forex.

I do have a basic knowledge of options, however have nevered investigated using them for trading.

Can you please elaborate on this.

My understanding is that I could buy a contract for 3c which gives me the rights to an amount of shares.
if the expiry is for example at Dec 2009. If i was to exercise my options at November 2009, I would be able to buy the contract size amount of shares at the options price.

Am I correct in saying this. So that I buy 1 contract at 1000 shares at .03c, I exercise in Nov 2009 at 2.50 and so I pay for 1000 shares 3c where the value is 2.50 per share.

All help is much appreciated.