Replies to post #26964 on NorthWest Biotherapeutics Inc (NWBO)

[gnawkz]

I have traded options for several years now.

I think it is important to keep in mind the total leverage being purchased when buying Call Options due to the low PPS for NWBO when compared to other biotech companies.

NWBO’s PPS of $5 is low. Thus, when buying a $1 call option, it is only providing 5x leverage for a potential 100% loss if the PPS has not moved above a certain strike price. In comparison, CLDX with it’s $17 PPS, a $1 call option would provide 17x leverage for a potential 100% loss. Thus a % move on CLDX’s PPS will have 3.4x the impact on the value of an option vs the same % move on NWBO.

This is extremely important to understand as when investing in stocks with single digit PPS. The bet is to have greater leverage with the acceptance of a potential 100% loss. But PPS can really define how much additional
leverage is actually obtained for the potential 100% loss. Thus, for shares with single digit PPS, it could be better off to buy the shares vs the options.

With that said, I own a bunch of options for Jan 2017 when those options first opened. As NWBO is just paving new roads, I don’t believe anything but the farthest out option is worth a look.

[austinmediainc]

Is that just a statistic for CALL options?
What is the statistic for PUT options? What percentage of those expire worthless?

I don't think so but it was based on an old study.

A study in the late 1990s by the Chicago Mercantile Exchange (CME) found that a little over 75% of all options held to expiration at the CME expired worthless.

http://www.investopedia.com/articles/active-trading/091714/basics-options-profitability.asp