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It depends on the investor.
An example: You buy a call on 100 shares of Acme at a $20 strike price, and you pay a $1 per share premium for it. Your intent is to make $100 profit, and to do so you'll have to sell the stock for at least $22 per share plus whatever your broker's commission is--if you have a broker that charges $10 for stock sales and $20 for exercising calls, you'll have to sell the stock for $22.30 per share to make your $100 profit.
If you are selling call options on stock you own (covered call) then there are two returns to think about: return-if-flat (meaning stock doesn't change between today and the option's expiration), and return-if-called (the return if the stock is called away from you). There are tools available to calculate both of these (see www.borntosell.com).
What else can I help you with?
Can you explain the concept of a split strike strategy and how it can be used in investment portfolios?
A split strike strategy is an investment approach that involves buying both call options and put options on the same underlying asset, with the goal of generating returns in different market conditions. The call options can benefit from a rising market, while the put options can provide protection in a declining market. This strategy can be used in investment portfolios to potentially reduce risk and enhance returns by diversifying exposure to different market scenarios.
What is the most effective tqqq options strategy for maximizing returns in a volatile market?
The most effective strategy for maximizing returns with TQQQ options in a volatile market is to use a combination of strategies such as straddles, strangles, or iron condors to take advantage of price fluctuations and volatility. These strategies involve buying both call and put options to profit from large price movements in either direction. It is important to carefully consider the timing and strike prices of the options to optimize returns while managing risk.
The market allocates capital to companies based on?
Risk, efficiency and expected returns.
How do the investment options compare to each other in terms of potential returns and risks?
Investment options vary in potential returns and risks. Generally, higher potential returns come with higher risks. Stocks typically offer higher returns but also higher risks compared to bonds, which offer lower returns but lower risks. It's important to consider your risk tolerance and investment goals when choosing between different options.
What is the most effective tqqq option strategy for maximizing returns in a volatile market?
One effective strategy for maximizing returns with TQQQ options in a volatile market is to use a combination of buying call options and selling put options. This strategy allows investors to benefit from potential price increases while also generating income from the premiums received from selling put options. It is important to carefully manage risk and stay informed about market conditions when using this strategy.
What are the potential benefits and risks of exercising call options?
Exercising call options can potentially lead to profits if the stock price rises above the strike price, allowing the option holder to buy the stock at a lower price. However, there is a risk of losing the premium paid for the option if the stock price does not increase as expected.
Which factor sets an upper limit on how much can be paid for savings?
Producers' expected returns on their business investments
If CAPM is valid then a stock having more volatile returns must have larger expected return than a stock with less volatile returns to compensate for higher risk borne?
no
What do you call one who is expected to lose?
the underdog
What are the benefits and risks of investing in inverted straddle options?
Investing in inverted straddle options can offer the benefit of potential high returns if the underlying asset's price moves significantly. However, it also carries the risk of losing the entire investment if the price doesn't move as expected. It is a complex strategy that requires careful consideration and understanding of market conditions.
What do you call radar reflections off a solid object?
Returns.
Which one has great potential-call option or put option?
Call options allow you to always buy the underlying stock at its strike price before expiration no matter what price the stock is in future and is therefore bought when the underlying stock is expected to go UP. Put options allow you to always sell the underlying stock at its strike price before expiration no matter what price the stock is in future and is therefore bought when the underlying stock is expected to go DOWN. As such, which one has greater potential depends on the prevailing market condition and your general outlook on the trend of the underlying stock. Generally, call options would have more appreciation potential in a bull market and put options would have more appreciation potential in a bear market.
