some serious buy @2.3, page-65

Interesting to read what investors on this thread are writing but the rose coloured glass view (GREED)will send you bust 9 time out of 10 in speculative stocks. I can rattle off a sqillion specs that have gone into production only to have their share price get decimated due to production and ultimately cash flow problems. To name a few, LYC, PDN, GBG, CCU, HGO, and AYN just off of the top of my head. And what did all of the investors do in these companies on the way down that is an investment sin? They invested with no stop losses and kept averaging down because they believed all the rose coloured glasses rubbish written on Hotcopper. The problem with averaging down is that in a bull market, fools get rewarded for dumb decisions but in a bear market they are wiped out and you normally hear them say, "Into the bottom draw" for those shares. That is the reason why 90% of investors/traders do not make money. Now what the smart people do is determine an investment on a risk/reward basis. The PENOC may have a huge reward if all goes good but what are you risking to achieve those rewards in percentage of your capital invested? Remember that if you lose 50% of your money you have to double that money somewhere else to break even. Lose 60% and you're in strife but lose 70%% and 99 times out of 100 you will probably never get your money back and in your efforts to do do so will turn into a speculative stock gambler chasing big returns and ultimately wiping out your account. By all means buy the PENOC but they should make up no more than say 10% of your investment in PEN. Greed & Fear is the only reason that a normal person would put a huge amount of cash into a penny dreadfuls options. Greed because you worked out that it's a ten bagger when it hits your rose coloured glasses share price estimate and fear that if you do not buy them now that you will miss out on all those possible profits.

Now if I use Beach Dingo's analysis ( not picking on you) with Pen at 12c and PENOC at 9c and we assume that you purchase PEN at 2.4c with a stop loss at 1.8c and you're initial investment is $10K then an investment in PEN has a risk of 25% ($2500) and a reward of 400% ($40K) so the risk reward ratio is 16 to 1. Now we do the same with PENOC assuming we invest in the rose coloured glass frame of mind and hold until they're worthless because no oppie buyer ever has a stop, never admits they got it wrong and probably averages down all the way down but we'll disregard this then you have a risk reward ratio of 10 to 1. You're risking $10K to make $100K but you're also risking 100% of your investment.

The oppie purchaser will be in the 90% of investors/traders that do not make any money and probably lose everything. Now if they luck in on Pen rising to 12c then they earn money from making dumb decisions and they keep doing it. They become legends in their own lunch hour and have a rose coloured glasses opinion in every company they invest in. Ultimately they are normally wiped out in the next bear market.

The smart move for longevity in the share market is to look at every investment on a risk/reward basis. Nine out of 10 people reading this will surmise that I'm full of crap, but one in ten will recognise that that a lot of what I have written is a trading plan for longevity in the markets.

One risk that may have been overlooked is what happens to PENOC shares if there is a share consolidation before a big capital raising. In all the consolidations I have ever seen or been a part of, I have never seen option holder end up better off afterwards.