Simple equity options questions?

Question

lets assume company X has a current stock price of $3.95

the sep20 $5 calls are trading at 0.25/0.30

if i want to buy ONE option contract it will cost me...(100 shares * 0.30)= $30.00?

in order to make money on the trade, the price of the underlying will have to be > $5.30 at the time of expiration?

the implied volatility of this option is 74.65 ... that is pretty high correct?

thanks vm for all your help

Answer 1

All correct - however...

Assuming you are talking about exchange traded options, you will be able to close out your position by selling one contract at any time you want.  So if, say the same contract is trading at 70cents in August, you don't have to wait until Sept but can sell now at $70 and bank a $40 profit.

74.65 is high volatility - yes.  Stocks are very volatile presently.

Answer 2

1.correct

2. yes, plus commission

3. yes