I believe it's up to the CBOE to decide when we have options available, but once we're somewhere over $2 or $3 they could do it, almost certainly when we move up to a major exchange. Options provide opportunities to both make some money on stocks you already own, or purchase more stock if you're right about major swings and act on it.
In the case of IMGN, I certainly thought it would move up substantially, if I had spent a few bucks on cheap calls, say May $5's or $6's when the shares were $4 or less, I suspect I could have been able to purchase them for about a quarter a share. If I bought 10,000 shares, 100 call options they'd currently be worth something approaching $10 a share, or $1000 for each call option. If I purchased on margin, I could buy all 10,000 shares and actually add to my buy power in doing so as at $13 dollars a share I can borrow 70% of that, but only pay $5 or $6 a share, not nearly 70% of the current share price. If I don't want to purchase on margin, I could cash in some of the calls and use the money to purchase some of the others and have borrowed nothing from margin.
I'm not big on using margin, but if I had half a million or more in pure equity, borrowing $50K to purchase 10,000 shares of a stock that are now worth $130,000 would certainly be worth considering. Immediately after doing it I might consider writing some out of the money calls on some, or even all of those share to pay back the $50K. Imagine if I could right 50 calls at say $2 a share for July $15 calls, that immediately bring in $10,000, and if the share exceed $15 I'd be called out, but I'd receive $15 a share for 5000 shares, that's $75,000 for the shares I sold plus the $10,000 I was paid for the calls, and I'd still have 5000 shares I owned. If the share price remained below $15 I could do it all over again, and the margin I'd borrowed would now be down to $40,000 as I brought down the $50K I paid by $10K with the calls I sold. Do this 5 times and I owe no margin and still have my 10,000 shares.
I've never done this aggressively, but my account hasn't been at the half million or greater level in decades. I believe with just a little success in NWBO I'll be well over $1 million, at that point selling covered calls, or buying calls to acquire more stock on margin is a nice way to potentially bring in cash with little at risk.
It's not for everyone, but if you really believe a stock is going to make a big move up, or down, it's a way to bring in some money, or add shares cheaply.
Gary
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