*****very shakey*******, page-16

re: trade4profit golam...

I assume you haven't traded options before?

It's simple really.

LEGO
Exercise price 15c
Expiry 30/04/05

By paying the 15c anytime up to the expiry date, the options can be converted into ordinary shares.

In simple terms, every one cent move in LEG's shareprice should be reflected in the options...that is they should also move in a similar direction by one cent....so a 1c move in LEG (4.5%) at todays closing price, should equate to a 1c move in the LEGO price (9%)...therefore you get much greater "leverage" with options.

Because of this "leverage" you can normally expect to pay a premium for options....the longer the "life" of the options (time till expiry), the higher the premium. A good indicator of where the market thinks the shareprice might go, is often reflected in the amount of premium on the options.

LEGO is currently carrying about a 3c-4c premium.

Occassionally, such as recently with COE, you can actually buy options for less than true value...or in other words, at a negative premium. In cases like this, it is a good idea to buy the options, quickly convert them to shares, then sell them on market for a profit.

Although you get much greater "leverage" buying options, your losses are also exagerated, so you need to be careful.

Hope this helps.

Cheers!