How To Buy Calls -

The earnings report drops, and it’s a massive success. Netflix stock surges to . Because you own the "right" to buy those shares at $400 , your contract is now "in-the-money".

After subtracting your initial $600 investment, you’ve made a $1,400 profit . how to buy calls

If the earnings report had been a dud and the stock stayed at or dropped, your option would have expired worthless . Unlike a stock owner who can wait for a recovery, an option buyer has a "ticking clock"—once that expiration date hits, your $600 is gone forever. The earnings report drops, and it’s a massive success

In this scenario, while a regular shareholder saw a ($390 to $420), your call option delivered a 233% return on your $600. The Reality Check: What if it Fails? In this scenario, while a regular shareholder saw

Theoretically unlimited if the stock price skyrockets. The "Aha!" Moment: Leverage in Action