I'm looking at this option from Twilio. I'm looking in particular at the Call for January 2018. Currently, it's at $8.41 for a strike price at $30, and the shares are at $31.96 now.
Suppose that Twilio went up to $40.00 next January. Of course, that's a big hurdle. Your option investment would have returned (1.59)/(8.41) = 18.91%. There's a lot of downside to this investment.
However, if you had simply invested in the stock itself, your rate of return would be 25.15%. Moreover, there's a lot less downside to this investment.
So in this case, who in their right mind would buy options?
Submitted February 12, 2017 at 09:47PM by Ask_Everything http://ift.tt/2ki2mxf
