Zion Oil & Gas Inc (ZNOG)

[DragonBear]

Buy ZN for 10 cents!

Let's see now...

Buy at 0.15 so as to be able to sell covered calls at 0.05. And when the options expire worthless, you buy more shares at 0.05. For an average cost of 0.10.

Let's take an example:

Buy 1000 shares at 0.15. Cost $150.

Sell 1000 at 0.05. Potential profit $50.

Stock gets tossed to the OTC. PPS goes down to 0.01.

That yields a net loss of -$100. Yeah that's a winning strategy.

Noted that yesterday the close for the $1 Jan leaps was 0.01. So getting 0.05 isn't guaranteed.

Wouldn't it be simpler to ave down, by buying at 0.01 after the PPS gets trashed?

You get to keep 850% profit if ZN breaks $1.00 - not bad eh?

If the dream is that ZN will run to $1 by Jan 2021, then those shares you bought at 0.15 would be called in by whoever you sold the Calls to. They would pay you 0.15/shr for the 1000 shares you previously bought at 0.15. Your profit would be zippo. Their profit would be the 850%.

So as to profit on the $1 dream, you need to sell covered Puts. Which is a bet on your part the stock is going up. Where the $1 Jan Puts at 0.55 go down in value, as the stock goes up. There's no exercise of the Puts which are now worthless. You get to keep your 0.15 stock, plus the 0.55/shr on the Put premium. Of course if the stock trashes itself, down to 0.01, then you have lost -0.54/shr on the options, while overpaying on the 0.15, and losing another -0.14 there. Dreams can be expensive. LOL