options tend to be traded with sentiment to time leverage.
if the heads got back to 20c, and a look then to momentum lift to say 40c,
(and would assume that IPO buyers certainly saw the upside)
all imo
the options may lift to say
6c/20c (6c premium only while out of the money),
10c/25c (5c premium + 5c in the money)
and
20c/40c (trailing by strike price 20c), and so on.
time premium is about sentiment and leverage.
So at 16.5c for the heads today, the leverage for say at 1.5c for an option purchase follows as imo
at 20c/6c = (20/16.5) 21% vs (6/1.5) 400%
at 25c/10c = 51% vs 660%
at 40c/20c = 240% vs 1330%
This imbalance causes the sp of the options to tighten and rise closer toward a premium where there is a discount reflecting the confidence of the heads rising.
For instance, if the options were trading at 4c today, then the math moves to
at 40c/20c = 240% vs 500%, where the additional gains is balanced by the risk of time expiry.
So its a question then, to what can be acheived in the next 9 months, and if the market will price this higher, based on its incredible potential.
FOMO, on heads if this new method of killing insects can bypass existing strain resistance treatments, could re-rate if the message is penetrated that it is a case of WHEN, not if.
The options will trail that shooting star.
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