Even though I am fairly heavy weighted with the options in comparison to the heads, options do carry risk.
The further "Out of the money" the greater the risk. Time value is the real killer as it draws closer to expiry.
At present the options still represent pretty good value with 20 months until expiry. One of the things I look at when making a decision on buying either Heads or Options is the price differentiation between the two.
It does vary considerably, especially when the option is "out of the money".
Timing is everything.
Using today's closing prices as an example:
IMC = .43 cents
IMCOB = .14 cents
Difference = .29 cents
Last month would have been a great time to buy options, if you could get them.
Someone bought 125,000 options for .05 cents on 9/02/18, when IMC was trading @ .24 cents.
IMC = .24 cents
IMCOB = .05 cents
Difference = .19 cents
As you can see IMCOB carried far greater leverage a month ago than what it does at today's price.
What you will notice over time as IMC increases in price along with IMCOB increasing, the price difference between the two will start to diminish until IMCOB eventually reaches it's target of .55 cents which is the Strike Price. After that IMCOB will not gain any real leverage, apart from going up at the same rate as IMC's Price.
The Differentiation comes into play, especially now as we are heading into exciting times ahead, in which both speculation and fluctuation of the share price will provide some great opportunities to switch between IMC & IMCOB.
Another thing to watch and keep in mind if you plan on switching between heads and options, the options are not very liquid which only adds to the difficulty.
Good luck with it.
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