Let's assume stock X has 1% growth for 5 days with initial price of $100:
Day0: 100.00
Day1: 101.00
Day2: 102.01
Day3: 103.03
Day4: 104.06
Day5: 105.10// (5.10%)
We have a 7x DLC of the stock X worth $2:
Day0: 2.00
Day1: 2.14
Day2: 2.29
Day3: 2.45
Day4: 2.62
Day5: 2.81// (40.5%)
While the stock price increases 1% daily, the 7xDLC moves (1%x 7) daily. Above is an example of positive compounding. Do note that your losses can also compound similarly.
Let's assume stock X has 1% growth for 5 days with initial price of $100:
Day0: 100.00
Day1: 101.00
Day2: 102.01
Day3: 103.03
Day4: 104.06
Day5: 105.10// (5.10%)
We have a 7x DLC of the stock X worth $2:
Day0: 2.00
Day1: 2.14
Day2: 2.29
Day3: 2.45
Day4: 2.62
Day5: 2.81// (40.5%)
While the stock price increases 1% daily, the 7xDLC moves (1%x 7) daily. Above is an example of positive compounding. Do note that your losses can also compound similarly.