Replies to post #2891 on Rite Aid Corp (RADCQ)

[fung_derf]

A call option is a optimistic thing. You are reserving the right to buy the stock at a later date at a price set today.
Each option is equivalent to 100 shares of stock.
Example, a call option at 5 means I can buy that stock later for 100 shares of the company for $5....so if the stock goes up to $10, I'm able to buy in advance for $5.
A put option is a pessimistic thing. You are reserving the right to sell the stock at a later date at a price set today.
Example, a put option at 5 means I can sell that stock later for 100 shares of the company at $5.....so if it goes down to $3, I'm able to sell in advance at $5
You pay a fraction of the price for an option, however, there is not only a perceived value, but a time value as well as an option expires on a certain date.