Mr Cooper Group Inc (COOP)

[lodas]

go-Wamu....when you buy a call option, the only risk you have is the money is lost if the option does not move up in price to at least the strike price at option expiration...if the stock is above the strike at option expiration, you have a choice to do one of 2 things....(1) cash out the option and take your winning, which is the difference between what you paid for the option, and its value at closing.....(2) call your broker and ask to be assigned the stock, which you can then sell on the exchange for a profit.... so, as an example: suppose that you bought a 12.50 call for july, and the premium was 1.50... so the stock must move above 14.00 dollars at op.ex. for the position to have any premium...so lets say at option expiration, the stock is 16.00.......you have 2 dollars, minus the time value of the option, usually it is .05 cents on the last day of op.ex...so, you can cash in the option for 1.95....or, you can take delivery of the stock for 12.50-1.95, or 10.95...now, you must have the money in your account, or margin to have the stock assigned to you...that is one way to do it... the other way, is that if the stock starts to move up from the price that you bought the option at, lets say 13.00, the premium would expand way above the price that you paid for the option of 1.50... it could go to 4 dollars ... in this case, 4.00- 1.50= 2.50 dollars...you could simply cash out the option before the option expiration, and walk away with the cash...you would only want assignment is YOU KNEW SOMETHING BIG WAS COMING DOWN WITH THE COMPANY AND A PRICE RISE WAS IMMENENT...remember, the sole purpose of writing options is to turn premiums...Lodas