Hard to explain simply in writing. If I may@datTechnicalGuy
I'll have a crack.
Let's say the current share price is about 21c, and the option price is 5c
If you have $10,000 to spend on LCL, you can buy $10,000 divided by 0.21= 47,619 LCL shares
OR
You can buy $10,000 divided by $0.05c= 200,000 options
To convert the options to shares, you have your 200,000 options x $0.16 = $32,000 cost
So you have the total cost of $10,000 + $32,000= $42,000 to have 200,000 LCL shares after conversion of options.
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However,
The advantage of the options is leverage. If the share price goes to 42c, the options on market should be now worth closer to 25c, rather than the 5-6c currently, that you purchased. So you can sell them at a 500% gain, or $50,000 whereas your shares are still worth $0.42 x 47,619= $20,000 and only double the purchase value.
So before Aug 16 option expiry, you could potentially sell $40,000 worth of options = 160,000 options.
You have a profit of $30,000 (from your original $10,000 purchase) plus 40,000 options remaining.
If you wanted to convert them to shares before 16th Aug- 40,000x $0.16= $6,400
So you now have 40,000 LCL shares at 16c with a profit of $30,000- $6,400= $23,600 profit plus the 40,000 shares@ $0.42 = $16,800
$23,600 + $16,800 = $40,400 profit from initial $10,000 investment
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If the options are not in the money...
If the share price drops to 10c and your options are worthless, you have lost $10,000 whereas you would have $4,762 (loss of $5,238) if you originally purchased 47,619 shares at $0.21
So basically what we have seen recently is the option price tracking the share price, and not at a premium price. So for those savvy investors, in my opinion, they would take a punt on the options being in the money because the upside is significant, whereas there is minimal downside risk, based on the options not trading at a premium relative to the share price.
IMO only the short term price of Gold or a market correction is likely to see the options out of the money, or worthless, and a temporary setback. If that occurs, maybe the decision is whether you view LCLs value in 12-24 months as being worthwhile re-investing at under 16c (hypothetically speaking) if the options investment is lost.
IMO DYOR I hope I didn't mash that up totally.
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Last
1.2¢ |
Change
0.001(9.09%) |
Mkt cap ! $11.57M |
Open | High | Low | Value | Volume |
1.1¢ | 1.2¢ | 1.1¢ | $24.02K | 2.183M |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
6 | 3325530 | 1.1¢ |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
1.2¢ | 2683381 | 6 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
6 | 3325530 | 0.011 |
9 | 1340249 | 0.010 |
8 | 1480905 | 0.009 |
10 | 3947997 | 0.008 |
5 | 1790000 | 0.007 |
Price($) | Vol. | No. |
---|---|---|
0.012 | 2683381 | 6 |
0.013 | 1184816 | 4 |
0.014 | 674928 | 5 |
0.015 | 15316 | 2 |
0.016 | 738000 | 2 |
Last trade - 16.10pm 14/06/2024 (20 minute delay) ? |
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