I think look at it this way. Let’s just use 30k, cause that’s what retail scrubs can get, so 250k shares and 125k options. Sell all the shares, let’s say 11c. So you get $27.5k back. In this scenario, paying $2.5k for 125k options. 2c each option.
With $2.5k, you are participating in the following, In 2 years time:
1. VRX is going no where, options expire worthless. Bye bye $2.5k.
2. Things are going alright, VRX got to 24c. Not as high as the ATH, but progressing. Options are now worth something, 6c are the implied value, adjusting for arbitrage and time, so let’s just say 4c each, you’re doubling the money. It is now worth $5k.
3. I think this is where options acquired cheaply are extremely valuable. Let’s say VRX gets back to the ATH, 44c. 26c implied value, we do the adjustment as above, 24c each. Look at it, $30k!!
4. Ok, let’s go a bit further. Smooth sailing, everything is good, I don’t know how to value actually, but let’s just pluck out @blister’s number, 75c each from the previous post of rough math.
Do same math as what we have been doing for previous scenarios, 55c. $68750, from a mere $2.5k investment.
TLDR, in 2 years:
- Below 20c, bye2 money.
- 24c, $2.5k -> $5k.
- 44c, $2.5k -> 30k.
- 75c, $2.5k -> $68.75k.
