And that is the difference between risk appetite and those...

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WayneEnterprises

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24/09/19

08:02

Post #: 40537440
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Originally posted by dalts66: ↑

There is still a lot of risk with the option vs the head. Yes this company has great potential. And there is every chance the price will keep climbing.
However there is also risk of a bad trial result. A change in legislation etc that may cause the price to retrace.
Owning the head may mean your 8c share is now worth 4c (for example) at time of option expiration. For the option at the same point, it would mean either letting the option lapse, or effectively paying 8.2c (option buy price of 4.2c plus the option settlement price of 4c) for the share now worth 4c. You still have the chance of selling the head, even at a loss if needed. That is not an option for the option holder. Those prices and circumstance are totally made up to explain my point.

I think the option price is about right re the risk at the moment. Fast forward to sucessful trial, more sales etc and they will fly.

But that is for the market to determine. Dont get caught out thinking nothing could go wrong. I have learnt this lesson the hard way. As an investor we may be inclined to buy twice as many options now, for the same price as half as many heads. This is awesome when prices rise. we just need to be able to afford to finance the option buyout. But it also means its a double wammy if the price retraces.

Do your own research. Consider both good and bad future results and work out how to best proctect your wealth.

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And that is the difference between risk appetite and those wanting to play it safe.

IHL Price at posting: 8.6¢ Sentiment: Buy Disclosure: Held
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