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the option price was 20% of the stock price. 20% off the stock price?
by TomVDB 7y ago
the option price was 20% of the stock price.
20% off the stock price?
- jedberg 7y agoNo of. If the stock was at $100 that month, we paid $20.
- ars 7y ago> If the stock was at $100 that month, we paid $20. and > So it had to go up 20% to break even. But if it went up 40% you doubled your money. Are contradictory. If you paid 20% of the stock prices you made money instantly, you made a TON of money actually.
- jedberg 7y agoThe stock is at $100. I purchase the option to buy it in the future at $100. I pay $20 for this option. I'm currently $20 in the hole, because I paid $20 for the option and got nothing. In the future, when the stock is at $120, I exercise the option and buy the stock for $100 with money borrowed from ETrade, and then sell it for $120. I've spent a total of $20, and gained $20 from the sale after paying back the loan, and am thus even. In the farther future, when the stock is at $140, I exercise my option and pay $100 for the share with borrowed money. I've paid a total of $20 and I get $40 after paying back the loan. I'm $20 ahead. Since I paid $20 out of my salary for the option, when it went up 20% I broke even, when it went up 40% I doubled my money.
- ars 7y agoI get it not, thanks for adding the details (it was really not clear from your earlier posts). This https://benefits.netflix.com/united-states/financial https://benefits.netflix.com/united-states/financial says the options currently cost 40% of the stock price, which seems very high to me.
- jedberg 7y agoYeah they doubled it after I left. But in return they give everyone an automatic 5% on top of their salary.