BioSante Pharmaceuticals, Inc. (BPAX)

[smallinvestor81]

Call Options are definitely the more popular of the 2 kinds of stock options. The other being Put Options that give you the right to sell the underlying stock for a fixed price.

Call Options enable you to buy the underlying stock at a price fixed right now no matter how high it rallies in future for just a small price relative to the price of the underlying stock without first having to buy the underlying stock! Apart from being an incredibly flexible and risk limited leverage instrument, Call Options are fantastic hedging instruments for any stock portfolios.

Say a $3 option for September is going for 30 cents. A call option is worth 100 stocks. The price of that option is $30. 30 cents times 100.

So you would gain the appreciation after the stock went over $3. You then have the right to buy them shares at $3 when the going price is $3.50. That's the difference between selling open and selling closed. Also if the price never goes up to $3 by September 15? The option expires. You get the money back $30 minus the contract fee's and whatever else they charged you.

You can do more research, mine is all over the place here. But I like calls because you never get stuck with stocks and have to wait for them to go back up. The option would expire( if not to far out ) and you could invest that money in another stock option.