Share your ideas and thoughts., page-71

If you are talking about IHLOB, you are over thinking it.

Try thinking of these in two different way.

Firstly, as the option. As you have correctly said the option can be in the money, or not. So when considering buying an IHLOB consider this. Heads at 7.1c means buying the option at 3.1c would be break even now. just as you have said. Remember to consider the time factor. Closer to the end date you would want to be in the money. Buying with a few years to go, you may be buying when its out of the money. You get the drift.

Secondly, think about the IHLOB after you have bought them. If their sale price is more than you paid for them you make a profit if you sell. You make a loss if you sell them for less than you paid for them. Just the same as the heads. Now if the heads take off, you may want to convert your options, or maybe just some of them to heads. In this case you need to pay the strike price.

Dors that help?