What are the expected returns from call options?

Answer:

Answer

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).
First answer by ID1219166357. Last edit by Jmowreader. Contributor trust: 1120 [recommend contributor recommended]. Question popularity: 12 [recommend question].