So why on earth would anybody ever want to buy options when you see these numbers right.
Looks like it's impossible.
Well the reason people buy options is for something we like to call max profit.
And here we say it's unlimited.
So what does that mean.
Well unlimited just means the stock goes from $1,145.50 to $10,000.
We can make an unlimited amount of money.
But for our purposes moving forward I want you to now think of unlimited as undefined because you're not
going to make an infinite amount of money right.
The stock is going to stop somewhere.
So unlimited amount of money as far as profit really means is undefined.
We don't know where the stock can go.
It's going to stop somewhere.
We have an undefined profit.
So the reason people buy options is because of this undefined profit.
If I have a big win if the stock goes from $1,145.50 to $10,000 dollars in 47 days I'm going to
make a lot of money.
So let's look at that big win.
So let's say the stock goes up a $100 hundred dollars in only 47 days.
OK.
Obviously a huge move.
What do we make for the stock purchase.
Well 100 shares to $100 profit means you make $10,000.
But here's the key thing with stocks versus options and that leverage we talked about.
So the stock cost us over $140,000.
So $10,000 profit on a $114,000 dollar investment really only ends up being a 9% percent
profit.
OK.
Not a bad profit for 47 days.
Let's look at the call option now the call option when we work it out earns us $5,300
dollars and it only costs us $4,700 dollars to buy it.
So in the same 47 days instead of a 9 percent profit we make over a 100% percent profit.
Yay finally a winner.
But look how hard it was to win.
But this is the reason people buy options.
They're looking for this big win this big return on your capital I'm investing a small amount with the
potential to make a big amount.
But remember the POPs are significantly different when you do that.
You've already seen how hard it is to make money.
You can make money you can make a big win but the odds are against you or the probabilities the chance
of making a profit are against you.