Buying Call Options Explained - How to Trade Options
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What Is a Call Option?
Call options are financial contracts that give the option buyer the right, but not the obligation, to buy a stock, bond, commodity or other asset or instrument at a specified price within a specific time period. The stock, bond, or commodity is called the underlying asset. A call buyer profits when the underlying asset increases in price.
A call option may be contrasted with a put, which gives the holder the right to sell the underlying asset at a specified price on or before expiration.
The Basics of Call Options
For options on stocks, call options give the holder the right to buy 100 shares of a company at a specific price, known as the strike price, up until a specified date, known as the expiration date.
For example, a single call option contract may give a holder the right to buy 100 shares of Apple stock at $100 up until the expiry date in three months. There are many expiration dates and strike prices for traders to choose from. As the value of Apple stock goes up, the price of the option contract goes up, and vice versa. The call option buyer may hold the contract until the expiration date, at which point they can take delivery of the 100 shares of stock or sell the options contract at any point before the expiration date at the market price of the contract at that time.
The market price of the call option is called the premium. It is the price paid for the rights that the call option provides. If at expiry the underlying asset is below the strike price, the call buyer loses the premium paid. This is the maximum loss.
If the underlying's price is above the strike price at expiry, the profit is the current stock price, minus the strike price and the premium. This is then multiplied by how many shares the option buyer controls.
================
#OptionsTrading #BuyingOptions #CallOptions
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DISCLAIMER:
This video is for entertainment purposes only. I am not a legal or financial expert or have any authority to give legal or financial advice. While all the information in this video is believed to be accurate at the time of its recording, realize this channel and its author makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors appearing in this video.
ADVERTISER DISCLOSURE:
Jake is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to www.amazon.com. Additionally, other referral links are included and this channel does receive compensation for sending traffic to partner sites. Shopping through our links is an easy way to support the channel and we appreciate and are super grateful for your support!
How to Trade Options
Like, Comment, and Share my videos!
🔔 SUBSCRIBE HERE 🔔 http://bit.ly/BroeSubscribe
💯 LET’S CONNECT 💯
📷 Instagram @JakeBroe 👉 Instagram: jakebroe
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👇 👇 Watch My Other Videos Here 👇 👇
★ How to Swing Trade Stocks (THE BASICS)
How to Swing Trade Stocks (THE BASICS)
★ My $25,000 Brokerage Account Challenge (2021)
My $25,000 Brokerage Account Challeng...
★ What Type of Investor Are YOU? (You NEED to Know)
What Type of Investor Are YOU? (You ...
You can support my channel by shopping on Amazon!
Click the link below and then just buy anything you want!
► ► ► https://amzn.to/2UCE3uT
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► My Camera 👉 https://amzn.to/2UZpFwA
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================
📚 📚 Books That Changed My Life 📚 📚
📗 How to Win Friends & Influence People 👉 https://amzn.to/2F3ahGC
📕 Dumbing Us Down 👉 https://amzn.to/2spodrZ
📘 Quiet - The Power of Introverts 👉 https://amzn.to/36b2ti3
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📔 Rich Dad Poor Dad 👉 https://amzn.to/3bliFyP
📒 Why Nations Fail 👉 https://amzn.to/3fWZ3Em
================
What Is a Call Option?
Call options are financial contracts that give the option buyer the right, but not the obligation, to buy a stock, bond, commodity or other asset or instrument at a specified price within a specific time period. The stock, bond, or commodity is called the underlying asset. A call buyer profits when the underlying asset increases in price.
A call option may be contrasted with a put, which gives the holder the right to sell the underlying asset at a specified price on or before expiration.
The Basics of Call Options
For options on stocks, call options give the holder the right to buy 100 shares of a company at a specific price, known as the strike price, up until a specified date, known as the expiration date.
For example, a single call option contract may give a holder the right to buy 100 shares of Apple stock at $100 up until the expiry date in three months. There are many expiration dates and strike prices for traders to choose from. As the value of Apple stock goes up, the price of the option contract goes up, and vice versa. The call option buyer may hold the contract until the expiration date, at which point they can take delivery of the 100 shares of stock or sell the options contract at any point before the expiration date at the market price of the contract at that time.
The market price of the call option is called the premium. It is the price paid for the rights that the call option provides. If at expiry the underlying asset is below the strike price, the call buyer loses the premium paid. This is the maximum loss.
If the underlying's price is above the strike price at expiry, the profit is the current stock price, minus the strike price and the premium. This is then multiplied by how many shares the option buyer controls.
================
#OptionsTrading #BuyingOptions #CallOptions
================
DISCLAIMER:
This video is for entertainment purposes only. I am not a legal or financial expert or have any authority to give legal or financial advice. While all the information in this video is believed to be accurate at the time of its recording, realize this channel and its author makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors appearing in this video.
ADVERTISER DISCLOSURE:
Jake is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to www.amazon.com. Additionally, other referral links are included and this channel does receive compensation for sending traffic to partner sites. Shopping through our links is an easy way to support the channel and we appreciate and are super grateful for your support!
4 سال پیش
در تاریخ 1399/10/22 منتشر شده
است.
38,907
بـار بازدید شده