trading pattern, page-16

I totally agree with this and it has been my thought since the first day of new options trading. To me it appears that someone slowly worked the price down in the weeks leading up to the options issue with the thought of snapping up cheap options because of the depressed sp. Once this was complete they would let the price run and make a large profit from the leverage on the options. I believe that there is a large premium in the options because whoever is buying them realises that its not really actually a premium if you are holding the price down artificially.

Also people going on about option premiums need to realise why there is a premium. Like Bungy explained earlier,the leverage is what decides option premiums. Even with a current premium of $0.06 there is still more money to be made in options if you believe the sp is going up.

Currently $100,000 buys 253,164 heads @0.395. If the sp goes to $1.00, then the total value of your shares is $253,164. This leaves you with $153,164 profit.

On the other hand currently $100,000 buys 625,000 options @$0.165. If the sp goes to $1.00 then the option price on market would be around $0.76 leaving you with a total value around $475,000. This leaves you with a profit of $375,000.

So if you buy the amount above with the current premium you would make around $221,000 more with the options.

As you can see the $0.06 premium is nothing if you believe that the sp is going north, in fact it could be low depending on what you believe the share price is going to. It should also be noted that the profit difference is not linear, it actually increases exponentially with the options the higher the share price goes.