Maybe an example is a better way to explain:If you buy an option...

Maybe an example is a better way to explain:

If you buy an option (PAAO) at the current price of 1c and the price increases then it's likely that the option price also increases, so you could sell the option to someone else for a profit before the expiry date in October. SAY the SP of PAA went up to maybe 10c there is a possibility that the "option" price may increase to say 4c (or whatever). You could sell the option and quadruple your money.

But if you hold on to it and the SP of PAA goes to say $1 then you could buy the head share for 20c and then sell it for $1 then pocket the difference of 79C (100c-1c-20c)

But maybe the PAA SP stays about where it is now and the option price stays at 1c or even drops more and anyway maybe there is no market to sell it. Then if this remains the case until October the "option" will expire and you will have lost your 1c.

Gambling or what!