Options Trading 101 – How to Sell a Call Option on Etrade? – How to Trade Derivatives?
I bought 100 shares of SNAP yesterday. In this video I sold 1 call option contract on SNAP with a strike of and an expiration of Oct 20, 2017. That means I sold someone the right to buy SNAP from me for anytime on or before Oct 20, 2017. If SNAP stock price never hits by Oct 20, 2017 then the person who bought the call option from me would never exercise their right. If that happened then I collect the 0 in premium and hold on to my stock. If the price of the stock went to then I would be forced to sell it at (loss of 0) but I would still make money because I collected the 0 premium. I only lose money if the stock goes past because the option would be exercised and my premium of 0 would be less than my loss on the stock sale.
buying a call option gives an investor the right, but not the obligation, to buy a stock, at a specified price within a specific time period.
selling a call option gives someone the right to buy stock from you at a specified price within a specific time period. this means you may be forced to sell stock to someone.
buying a put option gives an investor the right, but not the obligation, to sell a stock, at a specified price within a specified time period.
selling a put option gives someone the option to sell stock to you at a specified price within a specified time period. this means you may be forced to buy stock from someone.
if you think a stock will go up you can: (i) buy the stock, (ii) buy a call option or (iii) sell a put option.
if you think a stock will go down you can: (i) sell the stock if you own it, (ii) sell a call option or (iii) buy a put option.
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