Consider Buying a Home!s A house cost 100ks You visit the house.s You like the house.s You want to buy the house!s You don’t have the money, yet!!s You may pay earnest money!s You buy the option to purchase the house over the next 30 days for $10,000.
Consider an option to buy a stocks ABTL trades at 4.59s ABTL has a CALL option that has a strike price of $5.s 1 call option is for 100 shares of stock.s $60 is the cost to have the option to buy 100 shares of the stock for $500 over the next 30 days.s Max Loss is $60s Max Profix is unlimited.
Consider an Option to SELL!s ABTL trades at 4.59s ABTL has a PUT option that has a strike price of $5.s The PUT option is IN THE MONEY if the stock trades below $5 (i.e., you have intrinsic value in the put option).s The intrinsic value is 5 = 4.59 = 0.41.s You pay $0.70 per share * 100 share = $70 for 30 days worth of $5 protection.
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