MOQB options better entry than ord shares, page-236

An option (company listed option) gives you the right, but not the obligation, to pay the exercise price - normally at any time up to the expiry date - and the option becomes a regular share. For MRQOB, the exercise price - or strike price - is 1.0c.

So, if the shares were trading at 10c, with the exercise price at 1c, the option would trade circa 9c.

But here, we have the shares at 1.0 or 1.1c, with a 1.0c strike, so the options are on the cusp of being 'in the money'.

People are prepared to pay 0.2c today, knowing if they exercise by paying 1.0c, their total outlay, 1.2c is the same as the market price of the shares, or close thereto.

However, iIf come December the shares are trading at 0.8c, you're not going to exercise the options by paying 1.0c, as you are better off letting them lapse and buying the shares (the 'heads') directly.

Why buy them now then? We'll it's a punt - a big punt - with 50 odd days to expiry.

If the shares were to run (to say) 3c, the options would go to 2c (the share price less the strike price) and you have made 10x your money. You'd simply sell on market.

But if they fester or fall, you'll do all your money.

Simple.

ps and if you hold options and want to exercise it's quite a cumbersome process and trading in the options ceases a few weeks before the expiry date for this purpose.