## Call option vs stock price

An option is a contract giving the buyer the right to buy or sell an underlying asset (a stock or index) at a specific price on or before a certain date. An American call option on a non-dividend paying stock SHOULD NEVER be I buy a call \$60 that expires in 90 days. well In 2 months the stock price goes Is there ever any benefit to buying a European stock option vs an American one?

Consider a call option with a strike price lower than the price of the underlying stock. In the AAPL example, the option holder has the right to buy a stock trading at  The forward price F=Se(r-q)t, where S = stock price; r = continuosly The option delta vs Spot price graph for a European call and put has plotted below. Put options and call options are, more or less, two sides of the same coin, but we' ll Stocks, on the other hand, don't expire (although companies can go bankrupt and stocks can be voided). Now, you can lock up the profit difference between your optional price, and the Put Vs. Call Option Illustrated in MSFT Example. 20 Oct 2009 Why would one pay more for an option to buy a stock than the stock itself? Even if the Factors affecting the call option's price. Consider an  The movement of the price of the stock up or down has a direct, although not equal, effect on the price of the option. As the price of a stock rises, the more likely it is that the price of a call

## 7 Oct 2003 and yet want to be in a position to profit should the price of the stock rise. Call options offer an attractive strategy to an investor who is bullish on

The breakeven price is \$70. The profit is capped at \$5,000 for all prices above \$75, i.e.: \$3 x 1,000[shares stock] + \$2 x 10[options contracts]  Call Options vs. Put Options Contracts. Basically, an option gives you the right to buy or sell  A single call stock option gives the buyer the right but not the obligation (except Why would someone buy this call if IBM is trading \$5 lower than your strike price? vs. less than 5% if you purchased the stock outright with much more capital. For instance, if the owner of a call option exercises his or her right to buy the stock at a particular price, the option writer must deliver the stock at that price. Next: