I’m reading up on investing and I just can’t wrap my head around options. Help!
In: Economics
An option is the “option” to do whatever it says
Calls let you buy the stock for that price.
Puts let you sell the stock for that price.
Options are x100 shares.
Options also expire. As in the contract is only good until a specific time.
So example.
A call for starbucks expiring august 6th with a $120 strike price.
That means I can buy 100 shares of star bucks. No matter what price the stock currently is on the market for $120 a share. The only thing is. I have to do it before august 6th. Otherwise the contract is useless.
So if Starbucks shoots to $200 a share. I can buy 100 shares at $120 a share. Or just sell the contract for profit.
If it dumps to $10 a share. No one would want to buy it.
Options are riskier because they expire. If I bought stock instead of options I could just wait for Starbucks to go up. Instead I’m out whatever the price was
Latest Answers