Learning a bit about options. Can anyone explain to me why this is a bad idea or wouldn't work?
Assuming example stock XYX with current price of $5.10, with calls selling for $.50 at a strike price of $5.
Buying stock to cover would be $510. Call premium would be $50. Call being exercised would be selling the stock for $500, losing $10 from the original purchase. Offset by the premium, this would leave a $40 profit.
I am sure I am missing something here. Thanks!