Replies to post #227 on Noodles & Company (NDLS)

[Jld3294]

If NDLS never goes below $15 from now until Jan 16 then I never get to own the shares but I keep the $160 cash.

Options have value because of time to expiration.. The closer it is to Jan16 (or the further Ndls goes away from $15) the option will be worth less. So if Ndls goes to $20 that option I sold for $160 cash would probably be worth $40 cash, depending on what time in the year it was.

Same goes for selling calls. If you sell the Jan 16 call of $22.50 a share, you will get $150 cash today but forfeit any upside above $22.50 because you will be forced to sell at that price.

It limits your downside by collecting a premium but also limits your upside.