After subtracting your initial $600 investment, you’ve made a $1,400 profit .
The earnings report drops, and it’s a massive success. Netflix stock surges to . Because you own the "right" to buy those shares at $400 , your contract is now "in-the-money". how to buy calls
If the earnings report had been a dud and the stock stayed at or dropped, your option would have expired worthless . Unlike a stock owner who can wait for a recovery, an option buyer has a "ticking clock"—once that expiration date hits, your $600 is gone forever. After subtracting your initial $600 investment
Each share in your contract is now worth $20 more than your strike price ($420 - $400). you’ve made a $1
