Heres the scenario for a call option, and please answer the questions in brackets or correct me
lets say i buy 5 contracts (100shares/contract...is it always 100 shares/contract? ) of CALL OPTIONS of EBAY @ $20/share (is this price set by the market? and how much would it cost me to buy these 5 contracts?) and choose my expiration to be on Dec 1st, 07 (and do i choose my expiration date?), then the stock of ebay goes up to $30 in Septemeber so i decide to sell my calls in Sept(is that called excersing it?) would i have made 15,000 - 10,000 = $5000, i dont think thats the case...isnt the point of buying calls to buy 'em for a lot cheaper than $20/share and make a handsome profit? if its $20/share as the price on the stock market, how would calls be different than just buying and selling stocks? ok i guess this sums it better shouldnt the price/share when buying calls be a lot cheaper than the price in the stock market?
i thank u in advance for all the answer
2007-01-22
12:43:38
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5 answers
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asked by
zesty
3
in
Investing