What is premium in types of trades stock market trading

This gives you a profit of 10 per share. As each call option contract covers 100 shares, the total amount you will receive from the exercise is 1000. Since you had paid 200 to purchase the call option, your net profit for the entire trade is 800. Let us take a look at how we obtain this figure. If you were to exercise your call option after the earnings report, you invoke your right to buy 100 shares of XYZ stock at 40 each and can sell them immediately in the open market for 50 a share. Selling Call Options, instead of purchasing call options, one can also sell (write) them for a profit. Call option writers, also known as sellers, sell call options with the hope that they expire worthless so that they can pocket the premiums. Say you were spot on and the price of XYZ stock rallies to 50 after the company reported strong earnings and raised its earnings guidance for the next quarter. With this sharp rise in the underlying stock price, your call buying strategy will net you a profit of 800. Stop loss exit, basic and Advanced Options, place a variety of options orders ranging in complexity. Using your preferred option strategy, with a click you can filter for potential option combinations that match the strategy criteria.
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