If you’ve traded options for a reasonable amount of time, you’re likely aware there are many ways to generate income from these securities. However, they don’t come without their risks. 

“Options are complex instruments that can play a number of different roles within an investment portfolio, from helping investors manage risk to increasing income from current stock holdings. Buying and selling options can be risky, and trading the product requires specific approval from an investor’s brokerage firm,” states the Options page on the FINRA (Financial Industry Regulatory Authority) website.

If you’re new to options and want to generate income from them, buying call options on stocks you don’t own is one way to do so. However, you should only do so if you think the share price will increase significantly before the call expires. 

24/7 Wall Street Insights

• Call options are an excellent way to generate income from stocks, but aren’t without risk.
• Celsius Holdings (CELH) stock has corrected more than 66% since May, setting up a potential doubling of your money by buying call options.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Celsius Holdings (NASDAQ:CELH), the fast-growing Florida-based energy drink company, is one stock whose calls are worth considering to double your money. Although its shares have been down over 66% since their peak in May, its business remains healthy despite the summer correction. 

Here are three possible call options for you to buy.

Option # 1

Symbol	Price-Type	Strike	Exp Date	Bid	Ask	Last	Volume
CELH	33.77- Call	32.50	11/15/24	5.00	5.15	5.30	56

Source: Barchart.com

In this example, you’re considering buying CELH stock for $32.50 a share at the call’s expiration on Nov. 15. Your cost to buy this option, which gives you the right, but not the obligation to buy 100 shares of Celsius stock, is the ask price of $5.15 for one share, and $515 for 100.

Based on the $5.15 ask price, the down payment on 100 shares is 15.8%. You can sell the option before it expires to double your money on the call. If the stock appreciates by $8.59 (25%) based on the $33.77 share price, you can double your money on the call without exercising your right to buy CELH.

How likely is that?

Well, it last traded at $42.49 – $34 share price + $8.49 — in early August. Before that, it was May 2023. So, there are recent examples of trading this high. 

Barron’s recently published an article about Celsius suggesting that the correction caused by investor concerns over slowing growth was overblown. 

“While all energy drinks are packed with caffeine, Celsius products are low-calorie, sugar-free, and contain natural ingredients like ginger root and green tea extract that help boost metabolism and burn body fat. This appeals to the growing number of Americans pursuing healthier, more active lifestyles,” Barron’s contributor Evie Liu wrote.   

Between its PepsiCo (NASDAQ:PEP) distribution and 23% year-over-year quarterly revenue growth, it continues to use its growing operating profits to expand in Canada, the UK and Ireland, and Australia. 

Given the downward momentum, the only question is whether its shares will move at all in the next four months. 

Perhaps a smaller down payment is required.

Option # 2

Symbol	Price-Type	Strike	Exp Date	Bid	Ask	Last	Volume
CELH	33.79- Call	140.00	01/16/26	.30	1.52	.71	6

Source: Barchart.com

Here, we take a longer route to doubling your money by reducing the down payment considerably. Based on the $1.52 ask price, the down payment is just 1.1%. 

With a delta of 0.07988, you could double your money if the share price appreciates by $19.03 (56%) before the Jan. 16/2026 expiry. If you’re unfamiliar with delta, it indicates how much the option price increases for every dollar increase in the share price. So, in this instance, you’d have $19.03 times 0.07988, which equals $1.52, achieving your double. 

Given you’ve got about 16.5 months to double your money, your annualized return might not be as high as the previous example. Assuming you sold the call the day before it expired at $3.04 (twice the ask), your annualized return would be just less than 73%, not quite double.

But again, the amount lost if the shares don’t move is capped at $152, severely limiting the risk. 

Option #3

If you believe, as I do, that Celsius continues to have a bright future, you might try to generate income monthly by buying calls expiring around 30 days from now and then rolling them over every time you can sell them for a double. 

As I look at the calls expiring in a month, I get many different strike prices expiring in 32 days on Oct. 11. If you buy one at or in the money, you have to pay more for the right, but the price is still reasonable. Here’s the $34 strike with a share price of $33.79 as I write this. 

Symbol	Price-Type	Strike	Exp Date	Bid	Ask	Last	Volume
CELH	33.79- Call	34.00	10/11/24	2.42	2.67	2.69	6

Source: Barchart.com

In this example, you’re buying the $34 strike with an ask price of $2.67. That’s a down payment of 7.9%). Its shares would have to gain $5.07 (15%) over the next 32 days to double your money by selling before expiry.

It’s possible, if not probable. 

Of the three, risk-averse investors should probably go with the second choice. The third choice makes the most sense if you’re willing to risk nearly 9% of the strike price over a shorter time.  

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