G79 0.00% 2.7¢ goldoz limited

MUS share price, page-40

  1. 12,454 Posts.
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    Sorry Davisite I SO disagree with you here. I had the same discussion with someone else on another stock thread. Looking at the FPO price and the premium, and saying they are expensive .... well, it's irrelevant really! Stock traded options are a tradeable entity in themselves, and until they need to be exercised, that premium is irrelevant. It doesnt matter if I pay 2, 3, or 4 cents, as long as the SP goes up in tandem with the FPO's I am make the same profit as holders of the FPO's, only at much less outlay - EG: today at half the outlay assuming I picked up some at 2.7 cents.

    They are a GREAT way to get into MUS, or any stock. The premium you mention, is only there because they are dated 25/1/20 ... so they are quite safe from lapsing at this point. As we get closer to 2020, that premium disappears.

    The dangers with options are:
    1] buying them when they are near expiry & they are not "in the money" and losing your dough, and
    2] Getting carried away and buying too many coz they are cheaper, thus exposing yourself to greater losses if the SP falls.
    Last edited by Tibbs: 07/02/17
 
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