I have recently purchased 200 Call contracts with a strike price of $7.50 and July Expiration. Cost very little, average price 0.23. Little over $4k investment. I expect something big happening which will at least double the current price. If the shares do double to $12, I would make about $85K profit on my calls. This stock has been undervalued for too long, and the recent court activity with CELG screams Partnership or buyout. The other factor which is telling is the action in the preferred shares. Cleaning up their finances for a smooth buy out.
why buy options ? stock is cheap .... just buy the stock... options can expire worthless.... if you own the stock you can wait longer without probably losing it all..... im long 2100 shares... hoping for 8-12 this year..
Leverage my friend. I know the stock is cheap I also already own a ton of shares which I unfortunately bought too high. With this investment, I can do several things. I can simply hold and see if a major jump happens. Most I risk is just over $4k. Or I could try to sell half of them at .40 - .45. This way I risk little to nothing, and still have 100 contracts which I can just ride out.
You buy options for leverage ....yes you're right they can and a lot of times expire worthless. And since I paid 1.05, I'm only paying an extra $.28 time premium for the Oct 5 calls. (intrinsic value = .77) Obviously if the stock moves up the intrinsic value moves up and if it moves up quickly, the time premium will increase. I'm hoping the stock hits $7 in the next 4 weks, if it does the Oct 5 calls should trade at $2.30+.