What you keep failing to mention is the other potential . . . that the stock could go much higher and these guys wouldn't even consider buying replacement warrants so they can keep their shares. You also keep pretending that they have BOUGHT the extra shares at $5.00 today -- WELL, NEWS FLASH, the stock never got that low. They probably bought new shares somewhere around 5.10. So, your calculations are flawed.

Here's a likely scenario . . . Bought 3000 @5.10 . . . cost 15,300 + fee (let's assume they use TDAmeritrade @ 9.99) TOTAL COST 15,310 . . . sold November 5 calls most likely around .35 (not .40). 30 contracts x .35 = 1,050, less $32.50 in brokerage fees gives an additional $1017. IF the stock goes to 5.50 or higher, the options will be too expensive to replace, so these guys would most likely let them expire (and the brokerage will exercise them automatically). Total gain: 16,017 proceeds less cost basis of 15,310 = $707 net gain. 707 / 15310 = 4.6% return NOT 6 PERCENT. Still not a bad quick return, but now they won't be "rolling" any shares and options . . . they lost their shares through exercise. And what nut would want to buy back in at $5.50 or higher should the price rise when they already had it at 5.10? (Actually lower since the additional shares were bought with prior options proceeds . . . )

Although you and I disagree on options strategy, I think you should fully disclose the possibilities since these guys won't take time to digest the basic principles of options trading on their own.