Overall Evaluation

Depending on the price action in XYZ stock, any of the Examples 3, 4, or 5 might produce the best profit.

Example 3 requires that you have impeccable timing about the move up in stock price. This super-aggressive trade is only going to pay off under special circumstances.

Example 4 illustrates the advantage of selecting an in-the-money option and allowing a little more time to be right about the stock price movement. This is a less-aggressive approach. If XYZ is a fairly volatile stock that cycles through a 10 percent to 15 percent move every few months, this could be the best choice.

Example 5 lends itself to a longer-term move up in the price of XYZ. This trade works best for a stock that is less volatile and more likely ...

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