>So are you back to options ... again?!
Well, just to finish off this tutorial.
Here's the thing: - You buy a call option for
**C**= $4.06 with strike price**K**= $25.00. It expires in**T**= 143 days. - That gives you the right to buy the stock at $25 any time over the next 143 days.
- If you
__do__excercise the option (buying at $25), then you've paid**K**+**C**= $25.00 + $4.06 = $**29.06**for each share.
Uh ... yes, but let's ignore the cost of buying and excercising the option. The point is, you might be asking yourself: "What are the chances that the stock price will be greater than $
29.06 in 143 days?">So we're talking probabilities?
If we find that the stock must increase at the rate of, say, 50% per year, we might look for other options.
>But that's not 50%.
>Does that happen? I mean, a required annual rate of 50%?
Nevertheless, it's interesting to play with this spreadsheet:
> Well, there's an Explain sheet that says everything: |