Stock Markets Exposed

I need some help with stock options, is it really this easy????

Ok so I'm to investing in the stock market. I bought 500 shares of etfc stock at 4.76, and it's down to 4.00. I would like to put that money into something else but still maintain control of these shares because I think they will go back to 4.76 or higher soon(with in a year). My question is this. can i sell the 500 shares and instead buy options in etfc to maintain control of the shares? If I bought 20 oct. 08 calls options at a strike price of 4.00 at .80 cents. This would cost $16 + 9.99 (commissions) + .99(20) (price per contract)= 45.79 premium cost. Right???? or is that wrong for what it will cost Than when the stock goes to 4.76, I exercise the options buying 2000 shares of etfc at 4.00 and sell Immediately at 4.76. that would give me $9520(sale of stock)-$8000(cost to buy 2000 shares)=$1520 $1520-45.79(premium cost)= $1474.21 PROFIT Is this right, is it really that easy?? Mainly I want to know if I'm right ? A $45 investment to make 1500 bucks, why not????

Public Comments

1. Not exactly. If you want to buy options for 2000 shares it would cost you $1,600. It is .80/share ($80/contract not .80/contract). Therefore, you would break even when the stock hit $4.80 and start making profit thereafter. If it went to $5.80, you would make $2,000 profit.
2. it is not easy - theoretically this cannot be calculated - when you go for physical investment - option - everything will go wrong. it is risky.
3. Not QUITE so simple: As Corey says one contract (in the US) is 100 shares. So 20 contracts is 20x100x0.80c To have control over 500 shares you want 5 contracts In the UK an option contract is 1000 shares.
4. I would sign up for http://www.shareplanner.com. They describe each trade and the risk factor for each trade. They give the buy price, the stop loss price, and the sell price. They have done me a lot of good in my investments.It's worth the investment to use their advice.
5. You're math is all wrong, that's why not.