You buy an option to purchase a share at a future date. So, for...

You buy an option to purchase a share at a future date. So, for example, with LOMOA, they expire Dec 2013 (from memory), and it will cost you 2c per share to change from an option to a full share. If you purchased the oppie at .005, and paid .02 to buy a full share, total cost is 2.5c per share. If the share price is over 2.5c, say 2.7c, you have won (by 0.2c). If the SP is 3c, you have made 0.5c per share. You can get caught out if the SP is not holding up, i.e. it is worth less than 2.5c when they expire. Hope this helps.