OVTI October $15 calls at 10 cents

Alright, so a stock moved way lower after you bought it when you thought it was cheap in the first place. You smell some over the board manipulation as in the case of OVTI. Is there a chance you can profit quickly and with low risk?

Enter options - Limited risk and unlimited profits: Buying Calls e.g. 1 contract call for October options with a strike price of $15 means that you are buying an option to buy 100 stocks at $15 on Oct 21st (3rd Friday of the month). In effect you are betting on a stock to go up. Works perfectly well when a stock has had a recent drop such as OVTI and you think current levels are a good buy but you want to maximize profits and so buy options instead of stock.

Price of OVTI call is 10 cents today for the Oct 21st $15 strike price. Buying one contract means buying an option for a 100 stocks. This means that if you buy a 200 contracts = 200 * (100 * 0.10) = $2000.

Worst situation - You made a terrible decision and come Oct 21 these options expire worthless as stock never crossed 15 and never even made a jump to higher prices from existing 12.6 levels. You lose your 2000 dollar investment.

Good situation - Some buying kicks in and stocks move to say 13.5 in the next 1 or 2 weeks. The same $15 call option is now worth much more than 10 cents because it's probability of hitting 15 has increased dramatically (earler the gap was 15 - 12.6 = 2.4, now it's 15 - 13.5 = 1.5). With such a small increase in price, the option price for the $15 Oct 21st Call could easily double of triple (20 or 30 cents) and you could take your profits, meaning $2000 to $4000 profit on a $2000 investment. Okay so in the "Good situation" you are betting that the stock hits 13.5 to 14 atleast once in the next 15 - 21 days. Remember the closer it is to the Oct 21st date the riskier your investment becomes, so it's not a bad idea to cash out.

Excellent situation: Stock does live upto it's potential and goes to 16 - 17 bucks over the next 3 weeks. Option value in this case can easily be 0.8 to 1.5. Meaning your 10 cents buy has gone up to anywhere between 0.8 to 1.5, a 800% to 1500% return on investment.

Consider buying options. It has excellent potential. Worst case you lost that $2000 and the best case - well, benefits are unlimited.