Take this call for example:
FIO Jan13 22 Call
Let's say this Thursday the stock goes to $23. Here is my math:
Cost of option: $35 Cost of stock bought at $22: 100x$22 = $2,200 Thursday price of stock at $23: 100x$23 = $2,300 Thursday value less costs: $2,300 - $2,200 - $35 = $65
- Is this math correct?
- When executing the contract, do I need to have money in my account to buy the shares, or I can I just have my brokerage buy and sell it immediately? (I am using OptionsXpress, if that matters).
- Is there a difference in price between (a) buying the stock and then immediately selling it vs. (b) selling the options contract to someone else? In other words, is the value of the options contract the same as the profit that could be made by executing it ($65)?