When you’re bullish on a stock like Tesla (TSLA), you can either buy the stock outright or buy a call option. Both can be profitable, but they have different cost, risk, and reward profiles.
| Scenario | Initial Investment | Stock Price at Sale | Shares / Contracts | Sale Value | Profit / Loss |
|---|---|---|---|---|---|
| Buy Call Option (Strike $300) |
$12,800 (1 contract) | $500 | 1 contract | $23,400 | $10,600 |
| Buy Stock ($320/share) |
$12,800 (40 shares) | $500 | 40 shares | $20,000 | $7,200 |
In this case, the call option significantly outperforms the stock. But remember, if TSLA doesn’t move above the strike + premium before expiration, the option could expire worthless.
Summary: Options offer higher leverage, but they come with time limits. Stocks don’t expire and may be safer for longer-term investors.