DaytradeTeam Brainzzzz
Trading Tips and Strategies from Traders at DaytradeTeam
Monday, August 15, 2005
Call Options: Profit from Increase in Stock Price
Call options are used in Options Trading. A call option is an agreement that gives an options investor or trader the right (but not the obligation) to buy a stock, bond, commodity, or other instrument at a specified price within a specific time period.
In other words, a call option becomes more valuable as the price of the underlying stock goes higher. A call option can be used as a speculative instrument, essentially betting that a stock will go up in price. For example, if you believe that DELL stock is underpriced at $22.00 per share, you might buy a call option with a strike price of $20.00. If DELL stock price rises fast enough, the value of the call option will increase, giving you profit upon selling the call option.
Summary: Call options increase in value as the underlying stock moves higher.
In other words, a call option becomes more valuable as the price of the underlying stock goes higher. A call option can be used as a speculative instrument, essentially betting that a stock will go up in price. For example, if you believe that DELL stock is underpriced at $22.00 per share, you might buy a call option with a strike price of $20.00. If DELL stock price rises fast enough, the value of the call option will increase, giving you profit upon selling the call option.
Summary: Call options increase in value as the underlying stock moves higher.
Syndicate Site
