Buying And Selling Call Options Apr 2026

Note: Only sell "Covered Calls" (where you already own the shares) to limit risk. Selling "Naked Calls" has infinite risk and is not recommended for beginners. Limited to the premium received. 4. Key Terms to Know

Most brokers require a brief application to "unlock" options trading levels. buying and selling call options

A is a contract that gives the buyer the right (but not the obligation) to buy 100 shares of a stock at a specific price ( Strike Price ) before a certain date ( Expiration ). 2. Buying Call Options (Bullish) Note: Only sell "Covered Calls" (where you already

Stock XYZ is at $100. You buy a $105 Call for $2. If XYZ hits $110, your option is worth at least $5. You turned $2 into $5 (a 150% gain), while the stock only moved 10%. 3. Selling Call Options (Bearish/Neutral) time is your enemy

Use a Limit Order to ensure you pay or receive the specific price you want.

Options lose value every day they get closer to expiration. As a buyer, time is your enemy; as a seller, time is your friend.

Short-term dates (weeks) are cheaper but riskier; long-term dates (months/years) give you more time to be right.