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re: Options
Posted on 1/30/21 at 12:28 pm to greygoose
Posted on 1/30/21 at 12:28 pm to greygoose
In your example you wouldn't see a profit till the stock is above $15. The call option allows you to buy the stock at $10 but you're paying $5 at the moment for that so your profit calculation is wrong.
You can still make money if the stock jumps or IV shoots up and sell the call (like you would when you close a stock position) at a higher value before its expiration date.
You can still make money if the stock jumps or IV shoots up and sell the call (like you would when you close a stock position) at a higher value before its expiration date.
1
Posted on 1/30/21 at 12:34 pm to Big Saint
quote:Ok, this is where I get confused. The cost of the contract is $5 per share? So the cost upfront would be $500 for one contract?
In your example you wouldn't see a profit till the stock is above $15. The call option allows you to buy the stock at $10 but you're paying $5 at the moment for that so your profit calculation is wrong.
You can still make money if the stock jumps or IV shoots up and sell the call (like you would when you close a stock position) at a higher value before its expiration date.
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