Ok, that would cost you $14 to purchase that. The stock would have to have a monster Monday and Tuesday because next Friday if it doesn't hit $45 you lost all $14. Why I say Monday and Tuesday. Options have something called time decay and the closer to the expiration date, you option is worth less. So even if it's at $30-$35 on Wed or Thursday the price of the option may be less because of the expiration. Time decay is very important when you buy an option, Look a few weeks out, the more time you have the slower it decays. You are basically buying a $14 lotto ticket , nothing wrong with dreaming and it will be a cheap lesson learned. But if you hit the lotto on this one, don't expect this all the time. The odds are very much against you. But again $14 would be your total loss, unless they charge a commission, I pay a small fee for options I don't know what RH does.
And for argument sake the $44 strike is the same price, that is actually the better deal.
And I am not looking at the chart, I bet time decay will make that options prices about a dime on Mondays open.
An option contract represents 100 shares. So you have to multiply the price by 100. If it some how hits 45, you have the option to sell the contract for substantially more than the $14 you payed for it. Or say it hit $80, you have the right to purchase the shares for $4,500. The seller would have no choice but to sell them to you for 45 no matter how high it went.
Oh and there is no obligation to take the shares I will help you close out your contract if thats the route you want to go. But it's just the opposite to close out. You buy the one you now own, all you need to do is something called sell to close to finish off the transaction, I will look up how to do it on RH. No biggie I got chu if you do this.
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Ok, that would cost you $14 to purchase that. The stock would have to have a monster Monday and Tuesday because next Friday if it doesn't hit $45 you lost all $14. Why I say Monday and Tuesday. Options have something called time decay and the closer to the expiration date, you option is worth less. So even if it's at $30-$35 on Wed or Thursday the price of the option may be less because of the expiration. Time decay is very important when you buy an option, Look a few weeks out, the more time you have the slower it decays. You are basically buying a $14 lotto ticket , nothing wrong with dreaming and it will be a cheap lesson learned. But if you hit the lotto on this one, don't expect this all the time. The odds are very much against you. But again $14 would be your total loss, unless they charge a commission, I pay a small fee for options I don't know what RH does.
And for argument sake the $44 strike is the same price, that is actually the better deal.
And I am not looking at the chart, I bet time decay will make that options prices about a dime on Mondays open.
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Why $14 and not $0.14? What does the $0.14 mean? And if the stock does somehow hit $45 on Monday or Tuesday, how much money was made?
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An option contract represents 100 shares. So you have to multiply the price by 100. If it some how hits 45, you have the option to sell the contract for substantially more than the $14 you payed for it. Or say it hit $80, you have the right to purchase the shares for $4,500. The seller would have no choice but to sell them to you for 45 no matter how high it went.
Oh and there is no obligation to take the shares I will help you close out your contract if thats the route you want to go. But it's just the opposite to close out. You buy the one you now own, all you need to do is something called sell to close to finish off the transaction, I will look up how to do it on RH. No biggie I got chu if you do this.
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This is starting to make a lot more sense. Thanks bro.
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Any time homie. Once you understand the ins and outs options are a ton of fun.
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