Hi All, new to options just trying to understand something. Suppose you want to place a big bet on a stock trading at $2.75. Rough numbers here: you want to hit it big and think the stock will run. Say you buy 500 contracts @ $7 strike April, 2023. Costs roughly $13,250. You hit it, stock goes up to $30. Rough math, you could profit $1.1MM by buying and then selling those 50,000 shares. I understand to do this you would need the capital. If you don't, you can sell the contract.
I'm know it's not black and white, but how likely/easy it is to sell that contract and clear close to the $1.1MM profit? I understand you would probably need the stock to hit $30 and stabilize for at least a few days/weeks in order to sell the contract. Just trying to understand if it is stupid to place a bet like that if you don't have the capital. Or if there's a very high likelihood of selling the contract for close to $1MM in this situation. Obviously it's a different discussion on whether this is a stupid bet from the beginning so leaving that part out. Of course I could have everything in the above scenario wrong.
Thanks for your feedback!
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