hey guys as i am relatively new to investing i am wondering if someone would be willing to answer a few questions i have. i have never invested in options so i am completely clueless about them.
here is background: i have 70k shares in MGU. avg is 17.5. currently down 7 grand and have 5k equity.
1. if MGU was to go back to 17.5c (equivalent to MGUO .12c) i would be break even.
2. if i was to sell my 70k MGU shares at a 7k loss and then PURCHASE MGUO at .025 tomorrow with my 5K, i would then have 200K shares in MGUO.
3. HENCE, if MGUO was to return to avg 12c i would be pocketing 19K ! Less the 7k i lost from MGU, i would be PROFIT 13K just for MGUO going back to 12c, which is equivalent to MGU 17c my avg.
So i am wondering if someone could answer me this. i believe mgu will go back to 17.5c. so if that happens then MGUO will go back to .12c. so tell me why i wouldnt just sell my mgu shares at a loss and instead of waiting for breakeven MGU why wouldnt i just sell and buy MGUO which would make me profit by returning to avg share price.
it would take MGUO to go from .025 - 6c for me to win back my MGU loss of $7k. it takes MGU to go from .6c to 17.5 to break even.
either i am a genius or a complete dumba$$ but is this too good to be true ?
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