Comment by NickC25
2 days ago
You'd spend $0.18 per share, yes, but the option's price is $18, not $0.18. So your return would be roughly 4.1x, not 488x. Remember options contracts are counted in hundreds, so $0.18 is the price per share, not per contract.
If you're going to work it out per options contract, then you spend $18, and get to sell 100 shares at $88. 100 * $88 / $18 is still 488x.
(This number is large because Walmart is not going to go bust in the next few days! It serves to illustrate the arithmetic, but maybe it's not the most realistic example.)