Fundamental truths and haiku

[Karmasaur]

Hey buddy,....another inquiry if I may. I could go elsewhere but you seem willing enough to enlighten when you can.


I've been looking into sum light option trading,.....calls for now only. I've found one I like and would like to get into it.



Q1 lets say I buy 10/100 share contracts of C for .05 a share with a strike price of $7 per share strikeing on apr 11. current price being $4.91. then lets say it goes to $8 a share tomorrow,....i choose to exercise and make $1000 - contract cost - fees. My question is "Will I need enough funds in the account to cover the cost of 1000 C at $7 per share ($7000) or will I merely need funds to cover the cost of the contract at $.05 X 1000, or $50.

Maybe you can help, ok if not


Thanks throw


Karmasaur