What is LOM worth?, page-5

So let me get this correct.

Someone speculates that the Option value will continue to rise.
So they purchase Options at 6c each (while heads are at 32c), expecting them to match the Heads rising, and maybe hit 10c.

However, the Heads stagnate, and stays at 32c all the way to expiry.

So now they have a choice... Pay 30c to exercise the Options (which they already paid 6c for) which in effect gives them heads at a cost of 36c... so they can then sell them for 32c? making a loss of 4c...

There will be many people buying the Options for a speculative play, and who don't have the money to exercise them.



Here is a link to a proper article about it.
Why Some in-the-Money Strikes Are Not Exercised

http://www.moneyshow.com/articles.asp?aid=OptionsIdea-30240