They also have big upside potential which is why they always trade at a premium to the Share price plus the exercise price.
If the current SP increases to 10 cents you make 96% on the shares but 221% on the options.
If things go really bad in the company and you either hold 1M options or 1M shares you cannot lose more than $22K on the options but you could lose $51k on the shares.
Options are less risky with much bigger gains.
The one issue is if the premium you pay for the option is too high or the expiry date is very close.
Currently the premium is lower than it should be and we still have over 10 months to go before they expire.
I think the options are currently much better value than the shares which is why I only hold the options.
AVZ Price at posting:
5.2¢ Sentiment: None Disclosure: Held
