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Reach one Teach one

02/22/2021 05:05

$Apple I'm new and being doing my dd but still a little confused with call options. If I buy a call at a strike price that is higher than the market price what real benefits do I get compare to buying the strike price lower than the market price?? I've read that buying it at a higher strike price than the market you're already taking a loss so why do ppl do it??

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All Comments(6)

saxplayer9902/22/2021 09:40
I'm still very new to options too, but one piece of advice I've seen that makes a lot of sense to me right now is to stick with 'at the money' calls (strikes closest to current stock price). and you should add 30 days to however long you planned to be in the option, because of the accelerated time decay that last 30 days.

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Brian p.02/22/2021 08:04
for $$Apple a 1/2023 180 contract is 1300 1/10th the price of 100 shares. which would give you currently .38cents per 1 dollar move so 13k in shares would make you $100 profit where you could make $38 off of 1300 option so essentially for your 100 shares I buy 10 contracts and get $380 to your $100 per dollar move in its price so if apple moves 50 dollars I would make 19000 versus your 5000.. general rough math because of the gamma which is the rate of change in delta which is your change in the option price per 1 dollar move. options can lower your entry into a position multiple ways alot of great resources on youtube may want to check them out before getting in to deeply

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808****30502/22/2021 05:20
the cost of the contract will be cheaper if you call further put strike prices because your contract will not technically be worth much due to buying the 100 shares at a higher price. the big advantage is the cost of contract being cheaper allowing you to have more contracts and can possibly produce a bigger return but beware if you don't hit that strike price no one will want to buy your contract and you will lose all your premium paid

Brian p.02/22/2021 08:07

you should never hold a straight call contract even into the last month of expiration... you need to plan. for how long you will be in the trade how far out you plan on holding the position time has value with options.

Reach one Teach one02/22/2021 05:24

so basically its just a cheaper price for the call that's all. and the real gamble is if the market price gets to atleast the break even point or you will gain nothing or lose everything

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Josh02/22/2021 05:14
If you have the money to buy the shares that is the way to go. Also can use options to leverage your investments.

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Edison M.02/22/2021 05:10
Because you’re betting that the marKet will go up. so you’re basically buying a contract to purchase at that specific price no matter the market price. You buy a call option, marKet rises above that price, then you use your right to buy shares from that call option. If it market stays below purChased call option, then it goes to waste.

iBull02/22/2021 06:31

Yes

EXMtrades02/22/2021 05:38

If the market surpasses the price you want to pay for the stock and you have yet to purchase it the best option is sell puts which basically means you think the stock is worth buying at 1 but its at 2 rn so youd sell a put at 1 and say the stock keeps rising youd just collect the premium on the option expiring worthless for the put buyer. however if the price drops like you want than youd be locked in at 1 and can excersice your option and buy the shares for 1.

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donski02/22/2021 05:07
It’a cheaper..

Reach one Teach one02/22/2021 05:10

@donski yea I noticed that the price per share would be cheaper so that's all it really is then

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