Thorburn, I will explain it to you once again.CRCO at 4 cents...

Thorburn, I will explain it to you once again.

CRCO at 4 cents today, means the stock price needs to 24 cents by expiry just to break even. CRCO will only be valued on intrinsic value (or maybe slightly less as there is exercise time risk)ie If CRC is 20 cents, CRCO is worth nothing, if CRC is 21 cents CRCO is worth 1 cent, if CRC is 22 cents CRCO is worth 2 cents. Given the short time frame till expiry, this is something you need to be aware of. I am surprised they are 4 cents, and I agree with botcapper, they should be trading at more like 1 - 2 cents, and even at that price, I am still not sure if they are worth the risk.

Here is the scenario.

Buy CRCO at 4 cents today with CRC stock at 15, or simply buy the stock.

CRCO expire in 8 months.

If CRC is 24 cents at the time of expiry, then you have not made a cent on CRCO as they will be only worth 4 cents, yet you have made 9 cents on CRC shares (60% gain)

If CRC is 20 cents at expiry, you have lost 100% of your money on CRCO but made 5 cents on CRC (30% gain)

The stock needs to get to about 29 cents before you are better off with CRCO, and then its only slightly better off. Every point above 29 and CRCO is the winner. I'd rather buy the stock and not have the time decay sitting over my head given the short time frame till expiry.