Call option
The right, not the obligation, to buy 100 shares at a set price by a set date.
Where it is explained in full
Covered calls: the whole position, not just the premium. Selling a call against stock you own puts money in your pocket today and gives something up tomorrow. Look at both halves, or the premium will look like free money when it is not.
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Words beside it
- call
An option contract that gives someone the right to buy your shares at a set price, which you sell to collect cash.
- Credit spread (options)
Selling one option and buying another further out, collecting a net premium with a capped loss.
- Debit spread (options)
Buying one option and selling another further out, paying a net premium for a capped gain and capped loss.
- Exercise (options)
Using the right an option gives you.
- Intrinsic value (options)
The amount an option is in the money: for a call, stock price minus strike, if positive.
- Margin call
The broker demanding cash or selling your holdings because your borrowing got too large.
- option
A contract that gives you the right, but not the duty, to buy or sell an investment at a set price on or before a certain date.
- Options chain
The list of every available contract for a stock, by expiration and strike.
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