Farmhouse - let's use just cents, eh, the zeroes and decimal points can be confusing.
A head price of 12c (as in your scenario)should mean the options are 12-10 = 2c, all other things being equal, because an option can be converted into a head for 10c.
If heads are 12c and oppies 5 to 7c then people are prepared to pay up for options because they think the heads are going to go higher in the near future - to at least 5+10= 15c. Presumably they are not thinking of paying 10c to exercise the options soon or they would be losing money at current prices - cheaper to buy a head now. So they hope to sell the option in the near future for more than they paid for it.
So if options are trading for more than (head price - 10c) then that suggests optimism for future sp rise. [Today, head price - 10c = minus 0.1c so today people are optimistic]
But feelings can change in a microsecond and op holders might rush for the exits as end of October approaches, sending op prices close to zero and dragging head price near 10c.
To my mind, it's too complicated to call.
But a decent positive announcement soon will blow all this speculation away. That's what I'm hoping for!
Cheers, RR
TEX Price at posting:
9.9¢ Sentiment: Hold Disclosure: Held
