options or shares?, page-13

DP - I wouldn't get too hung up on the black scholes valuation method. Mathematicians accurately calculate the volatility using historical price data - you would just be guessing.

I think as likely a small investor, you need to ask yourself 2 questions. 1) What do you think the price will be in 2017 when the options expire? 2) Would you be happy to lose your money if the share price was 26c in Jan 2017?

With an option price of 6.8c and an exercise price of 27c, you need the share price to be >33.8c to not lose money. At 33.8c you break even but if you bought the share you would have more than doubled your money. My calculation says that the share price would need to hit 53c (based on oppy of 6.8c and share of 14c) for you to be better off buying the options over the shares. so:

Better to buy share < 53c at Jan 2017 > better to buy options

obviously, if the share price hits $2 you will be significantly better off with the options.