WHN is a speculative stock. WHNOA - options on a speculative...

WHN is a speculative stock. WHNOA - options on a speculative stock - are therefore extremely high risk.

Having said that, at 0.001c, it's not as if you have much potential for the options to decline in value until they expire. If you buy at 0.001c, come expiry on 30/11/2014, if the underlying stock is worth 4c or more (4c is the exercise price) you could get a decent (possible multi-bagger) return. If the shares are not at this level by then, the options will expire worthless, and you would have lost 100% of your investment, even at 0.001c. From now till then, if the market believes the underlying stock COULD get above 4c before expiry, then the options should rise. If the market doesn't believe it, the options will remain at 0.001c.

The question then becomes what could drive the underlying stock towards that 4c level? (as an aside, for those who originally paid 1c for the options, they'll be looking for the stock to be above 5c before getting excited)

In the next 6 months we are likely to have news on:

1) Final La Bella 3D seismic data
2) Assumption of operatorship and drill commitment on La Bella from AWE
3) Exercise of Tap Oil option to see another $2.7m paid to WHN
4) Awarding of 3D seismic contract for Seychelles
5) Possible phase 2 seismic, phase 2 back cost payment from Ophir, and perhaps (maybe unlikely given the timeframe) drill commitment in the Seychelles.

So, plenty of positive newsflow is possible. It is also possible that we will see:

1) WHL sell down a further higher priced stake in La Bella post good 3D data
2) Pick up another project in the wider East African region

I think the last item there is quite interesting. If the mechanism to pick up another project was to buy/merge with another company then that could create a scenario whereby the options could be repriced or extended i.e. be given a second lease of life. This would likely increase their value given the closer the expiry is to potential drill success, presumably the higher the value of the underlying stock and also the options.

DR knows - as we all do - that it'd be tremendous for the company if the options did get in the money since it's raise a cool $16m or so for the coffers. I'd be surprised if he's not working on ways to see than happen.

To summarise all the above, I can see a few scenarios where underlying WHL stock will get to the level where WHNOA are in the money. If that happens, you will likely see the option value increase many times over from current levels. However, it is close to a binary situation. You will either make you money many times over, or you will loose it all. If you buy, do it with open eyes. I have bought some at 0.001c. I not recommending you do. You should do your own research and think about the very real chance of loosing 100% of any you may invest.