Dear Rick - If I understand your post correctly, there may be one miscalculation. If the June 40 calls are trading for $4.90, then $4900 will buy you 10, not 100 calls (since each contract covers 100 shares of stock). As such , if the stock trades to $45.59, your profit would be only $690. Last observation, options are a wasting assset,meaning that their value decays over time. If you buy the stock and it remains flat, you have lost nothing but the opportunity cost on your funds. With options, if the price is not above $44.90 by expiration, you will have lost the entire premium.
Good luck,
Brett |
