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> e.g. 3:37PM, $GME trading at ~$73. 2/26 $80c were around $14. I'd never heard of an option until a month ago. My understanding: say you have c. $140 to spen
by iso1631 6y ago
> e.g. 3:37PM, $GME trading at ~$73. 2/26 $80c were around $14.
I'd never heard of an option until a month ago.
My understanding: say you have c. $140 to spend
You could buy 2 shares at $73 each
If you think it's going to go up to $100, your $146 turns into $200
If you think it's going to go up to $400, your $146 turns into $800
If you think it's going to stop at $80, your $146 turns into $160
If you think it's going to go crash to $10, your $146 turns into $20
Instead $140 for 10 call options (which are for 100 shares each), so 1000 shares at $80
If you think it's going to go up to $100, your $140 turns into $20k
If you think it's going to go up to $400, your $140 turns into $320k
If you think it's going to stick at $80, your $140 turns into $0
If you think it's going to go crash to say $10, your $140 turns into $0
Is that right?
- mizzack 6y agoYeah except that the $14 contract price I quoted was per share, so a single contract in that scenario would be $1400 premium. So: If you think it's going to go up to $100, your $1400 turns into $3.4k If you think it's going to go up to $400, your $1400 turns into $~33.4k
- iso1631 6y agoAhh, whenever I see calls they're usually quoted in blocks of 100 shares
- vmception 6y agoyour $140 wont buy you 10 call options at $14, you might not be able to enter the market at all Option prices have to be multiplied by the quantity of their underlying asset, so 100 is standard in the equities space. $14 x 100 = $1,400 $1,400 is the amount you have to put down. so there is still amplified return possibilities but you were probably overestimating by an order of magnitude