Call Options: Second Lesson




A call option is the right, but not the obligation, to buy a security (stock, ETF or currency) at a certain price (strike price) on or before a certain date (expiration). One option allows the buyer one hundred shares of the underlying security.

Let us examine the video on the perspective of the call buyer.

Jimmy bought one call option of Verizon stock trading at $60 per share. One option corresponds to 100 share of Verizon stock, and monthly options expire on the third Firday of each month. Jimmy pulls out an options chain, and elects one $.60 call option with $62.50 strike price, and April 17, 2020 expiration.

Case 1:

The Verion stock moves to $61 a share on April 17, 2020. The option becomes worthless and Jimmy has a loss of $60 = 100 x $.60.

Case 2:

The Verizon stock moves to $65 a share on April 17, 2020 and Jimmy sells the option. He has a profit of $190 = 100 (65 – 62.50) – 60.


This entry was posted in English and tagged . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.