options for dummies, page-21

Lepanic wrote ::::
And for the guys suggesting there will be a mass exodus of the options close to expiry because noone will want to exercise them, thats complete nonsense. Its called arbitrage and as long as there is a chance to make risk free money there will be traders who take up the difference. Say we have heads at 30c, and options at 10c. Anyone who sells the options to say 8c would be quickly snapped up as they will be in reality buying the shares for 28c (20c + 8c option). Some might argue price volatility will stop this from happening...this is something that has to be evaluated after the targets have been reached.

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It should be also said that if you believe in the stock and that the likely hood is that these Oppies will be exercised, you could take another view...contrary to above.
Simply looking at % growth
If you have say $10K.
Buy Heads @ say $0.19 = 52,631 shares
Buy oppies @ say $0.041 = 243,902 shares ( with 20 cent exercise)

The decision to sell for a 2 cent discount as above again is good decision and just meant that you have maximised your leverage from capital on offer.
If we consider that the likely hood of having enough capital to convert 243,902 oppies x $0.20 =($47K)

if consider the decision
Heads price of $0.30/share, equates to $0.11 gain on 52,631, which equates to gain of $5789

Oppies price of $.10 less discount sell $.08, still equates to a gain of 243,902 x $0.039, equates to gain of $9512.... this also means it offers a gain to the buyer of the discounted sell price as it will be $0.02 below true market value..hence makes attractive gain with no risk to the buyer who is looking to convert/exercise options. ( they make $4878...so everyone wins....
soooo long as the results come through, if you're a bull on this stock then seriously options are the way to go.

That would make options a Win - Win (even with a discount) and maximises use of capital $10K..

This reinforces Lepanic message...good post before L