Calls — How To Buy

Your contract is now worth $2,000 ($20 x 100 shares).

You buy with a strike price of $400 that expires in one month. This contract costs you a "premium" of $6.00 per share, or $600 total (since one contract covers 100 shares). Your Risk: The most you can lose is that $600 premium. how to buy calls

In this scenario, while a regular shareholder saw a ($390 to $420), your call option delivered a 233% return on your $600. The Reality Check: What if it Fails? Your contract is now worth $2,000 ($20 x 100 shares)

Theoretically unlimited if the stock price skyrockets. The "Aha!" Moment: Leverage in Action Your contract is now worth $2

After subtracting your initial $600 investment, you’ve made a $1,400 profit .