AVZO Current price, page-58

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pastperformer

7,707 Posts.

2343

10/07/19

10:38

Post #: 39452023
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Originally posted by Deepp: ↑

Thanks everyone for the answers.

let me put in terms of $$

take an example of 100,000 shares with following price
price at purchase @5.3c heads=$ 5300
price at purchase @2.3 for option=$ 2300

If at the expiry

SP @3c =$ 3000
you lose on heads 5300-3000=$2300
Option=0
you lose on option= $2300

else if,

SP@4c =$ 4000
you lose on heads 5300-4000=$ 1300
Option you convert @3c paying additional $3000
Option convert to heads total price =initial $2300 + $3000=$ 5300
you lose on option 5300-1300 =$ 1300

else if,
SP @ 9c=$9000
you gain on heads 9000-5300= $3750
Option you convert @3c paying additional $3000
Option convert to heads total price you paid =initial $2300 + $3000=$ 5300
you gain on option 9000-5300= $3750

so my point is if Option price + Strike price is = current share price at the time of purchase and as long as share price is above the strike price at expiry, owing option or heads is same risk in terms of $ value for long term. but potential to buy more shares with a given capital at present. Hence why options generally needs to trade with premium but yesterday was exception and good value to purchase.

Please correct me if my understanding is wrong.

Expand

No it's exactly right.

I'm not sure what the other jibberish other people are going on with. The amount you make is totally up to you, it's a leveraged product so:

1. You can outlay less, have higher exposure

or

2. outlay the same and have more exposure

your maths is correct

AVZ Price at posting: 5.2¢ Sentiment: Buy Disclosure: Held
1 Upvote

0 Great analysis

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