ALA 8.33% 13.0¢ arovella therapeutics limited

Hi thereIts all about the leverage.Here is a simplistic...

  1. 3,958 Posts.
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    Hi there

    Its all about the leverage.

    Here is a simplistic example:

    Lets say the heads are at 5c and the options 2.5c.
    If the heads go to 10c and the options are at 5c (given the 5c exercise price) then both securities rise by 100%.

    Lets say the heads go to 15c and the options 10c.
    Heads means you triple your money from 5c to 15c.
    Options means you quadruple your money from 2.5c to 10c.

    And so on and so forth.

    Of course the enticement of these riches doesnt come without risk, and leverage can worth both ways.

    Also the options are not perpetual instruments. They expire, and if out of the money they can expire worthless.

    With SUDOE there is 2 years before expiry so that is obviously plenty of time before there is a real time decay element to the option pricing.

    So why are they being bought today? Its a combination of investor bullishness in the outlook for SUDA along with the long time till option expiry.

    Hope that helps.

    Good luck

 
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