Quote:
Originally Posted by lewdog
Ok so I am getting the basics here but still not understanding what a stock would have to do for me to say, double my money. How do I realistically set expectations? Let's take the $30 strike, a year from now, at $4.36 for 100 shares. What would the stock have to do for me to double my money on that?
|
If you paid $4.36 for a single CALL option contract, which equals $436 for controlling 100 shares and the stock is roughly $18.20 today, if the stock goes to $23-$24 within the next 6 months, you will double your money.
Why? Because the option would be around $8-$8.50 as you would be much closer to the $30 strike with plenty of time left.
Make sense?