Options are basically contracts that allow a person to buy a stock at a certain price (Strike price. Make sure to check out our FAQs page for more key terms). You pay money up front for the option because you think the stock is going to either go up or down. When the stock goes up, a CALL option will go up. When the stock goes down, the CALL option goes down. Simple right? When you buy calls, you will... [more]
... buy in lots of 100 (One contract=100 options). That means that if you see the price of the option at $1, it will cost you $100 for one contract. The next piece of information you must know is the STRIKE PRICE. If you ever decided to buy the stock (Exercise the option), the strike price will be the price you buy the stock at. To give an example, if you buy one call contract of INTC, and the strike price is $80, you could buy 100 shares of INTC for $80, even if INTC was at $100!
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