Stock option question?

Question

if a call option is priced at 0.30, what is it going to cost me to buy the option. not counting any commision. and if i want to exersice the option, the shares need to go higher than the strike price right? i know i stand a good chance to lose all my money on options. i doubt i will buy any options. just trying to understand them better.

Answer 1

One option contract is for 100 shares of the target stock or ETF. So an option going for .30 would sell for $30.

If the price of the stock goes above the strike price ("in the money"), you can sell the option for a profit, or you can "exercise" the option: buy 100 shares of the stock at the strike price. If you do nothing, an "in the money" option will automatically exercised by your broker.

You can also sell to open option contracts.

Answer 2

$30

You might be able to sell at a profit even if it's not in the money.  The value will probably go up if the the price moves up so that it looks like it might go in the money, or if the volatility of the underlying stock increases, again, increasing the odds the the stock will be in the money.  All of this is limited by the fact that the time value of the option is always decreasing.

Answer 3

Get a book in the library on Options. The thing with options, unless you expect a SIGNIFICANT move in the price of the underlying stock in a SHORT period of time - do not buy an option.

Answer 4

No idea.

an option has 2 prices; the bid and the offer.

you pay the offer to buy an option and get the bid price to sell it.

assuming that $0.30 is the offer price and you're buying, chances are that you'll fork out $30 for that option, unless there's some idiotic strike price on it and we're not dealing with multiples and the price you saw is the price quoted for 1 contract.

Answer 5

You can get good education about options on most financial websites.  Or get a book, as the first answer says.

Glad you are just trying to understand. You do not want to touch them until you have a good understanding.

You can lose many times your money, and get deep in debt, through options.