options, page-44

Sure mate....

An option is a RIGHT to buy a share and it can be traded like a normal share under ticker code IHLOB in this case. The important difference between the two is the fact that the option has a time limit or expiry date.


So for IHLOB they become worthless after 30/09/2020.

You have 3 choices once you buy the option:-

- you convert it to a share at a cost of 4c per share as displayed above - this can be done at any time before the expiry date
- you can sell your option on the market just like you trade normal shares
- you can just let it expire worthless if it's not worth converting to a share (usually when the share price is lower than the exercise price getting close to the expiry date)

They are riskier than shares in that you could be left holding them, but on the other hand, they give you great leverage in that you can buy a lot more of them than you could buy shares and if the SP zooms ahead of the exercise price, you're sitting pretty.

Hope this helps...