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You take the whole value.
For example: You bought the call for $1 which x 100 equals $100. You then sold it for $2 which x 100 equals $200.
Take $100 from $200 and you are left with a gain or $100.
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When do you sell a call option?
There are a couple of times you'd do it. The first is if you want to automatically lock in a gain. Let's say you have a stock you bought at 15, and you want to double your money on the investment. So you sell a call at 30 with a long expiration date...oh, maybe a year. If at any time the stock crosses the $30 threshold, you exercise the option. You can also use short calls and long puts (sell a call, buy a put) as a hedging strategy. And then there's the call you sell when you just want to make money by collecting premiums--you sell a call at a higher price than you think the stock will reach, and hope it doesn't go that high.
What is the difference between writing a covered and a naked call option?
"Writing", "Selling" and "Granting" are all terms that can mean Going Short the option."Writing a Naked Option" is simply going short the option. It seems super risky because when you Grant Options your profit is limited to the Option Premium that you receive for the Option, yet your risk is unlimited.Naked Call - Profit Limited to Premium Received. Risk is Unlimited, if the market keeps rising, you keep losing.A "Covered Call" as you can infer from the name offers a degree of safety over the Naked Call. In a covered call you limit the risk by buying the underlying security. SO you now have two open positions:Short the CallLong the SecuritySo for example, you buy 1,000 shares of IBM at $50.Then you SELL a Call option to buy 1,000 shares of IBM at $50. You receive $3,000 for the option.So in essence, you have $3,000 (the premium received) in your account, BUT don't celebrate too quickly because you're on the hook should IBM Rise.However, the good news is that IF the market goes against you, you gain on the shares of IBM which pay off the loses on the call. Viola, you are covered.Covered Call - Limiting the risk factors inherent in option granting, naked selling or writing utilizing the underlying securities.- - - - -The difference between writing a covered and a naked call is simple.When you write a covered call, you own the underlying stock. There are some hedging strategies using puts and calls together, and you can also "lock in" profit with a covered call.Example: you own a stock you know goes up and down in price on a cyclical basis (meaning it has a pattern of ups and downs that repeats itself year to year) that you paid $20 for. You think the highest it's going to get is $45, so you write a covered call at $45. You also think it will hit $20 in six months, so you buy a one-year put at $20...but that's not part of this discussion. If it actually does hit $45 you get a nice chunk of change dropped in your brokerage account and your stock becomes someone else's problem.When you write a naked call, you don't own the stock and you believe it will never rise to the call's strike price. In that case your profit is the premium on the option. If it does you've pretty much had it unless you've got your call hedged with another call.
How do you calculate gain and loss on covered call options?
G/L = (amount sold (for underlying security) - amount paid (for underlying security))+ premium paid There are commercial tools available to help you with covered call trade selection and covered call portfolio management. They will also perform the profit/loss calculations. See www.borntosell.com as an example.
How many calorie make one pound?
If you calculate your BMR this will tell you how many calories your body needs a day to maintain its weight. If you then consume 500 extra calories a day for a full week you should gain around a pound in weight. So I would say the answer is 3500 calories.
Differences between Forwards and Futures?
Forward contracts are very similar to futures contracts, except they are not marked to market, exchange traded, or defined on standardized assets. Forwards also typically have no interim partial settlements or "true-ups" in margin requirements like futures - such that the parties do not exchange additional property securing the party at gain and the entire unrealized gain or loss builds up while the contract is open. A forward contract arrangement might call for the loss party to pledge collateral or additional collateral to better secure the party at gain. (Wikipedia)
What is the relationship between a regular call option and binary call option and a gap call option?
Regular call options have limited risk and unlimited upside gains while binary call options have limited risk along with limited upside gain.
Buyint Stock Options?
Trading stock options differs from buying or selling individual stocks and stock indexes to a considerable extent.When a trader engages in options trading, he is buying the right, but not the obligation, to purchase or sell an options contract at some future date for a predetermined price.There are four basic tactics available to an options trader. A trader feeling that the value of an option will increase in price prior to the option's expiration date can purchase a calloption or sell a put option. A trader who feels that the value of an option will decrease before option expiration date can sell a call option or purchase a put option.Buying a call and paying a premium gives the trader the right to purchase that stock at any time prior to option expiration if that trader chooses to exercise the option. If the stock on which the auction is based gain in value, the option holder can force the grantor of the option to sell the stock to him at the lower price, earning a profit. If the price of the underlying stock declines, the trader simply allows the option to expire worthless.The total risk on this type of transaction is limited to the amount of premium the trader paid for the call option.When selling or writing an option, the trader receives the premium in exchange for granting the option purchaser the right to buy or sell a stock at any point prior to option expiration, with the price being fixed at the time the option is written.Options trading is considered more risky by some experts than is traditional stock trading. This is because the value of an option can change unpredictably, sometimes with total disregard for the value of the underlying stock on which the option is based.Other experts consider the risk to be lower because options contracts can be combined in such a manner as to protect the trader regardless of which direction the value of the option takes. These combinations have colorful descriptions applied to them, such as bull call spread with a naked leg, iron butterfly and many others.
When do you sell a call option?
There are a couple of times you'd do it. The first is if you want to automatically lock in a gain. Let's say you have a stock you bought at 15, and you want to double your money on the investment. So you sell a call at 30 with a long expiration date...oh, maybe a year. If at any time the stock crosses the $30 threshold, you exercise the option. You can also use short calls and long puts (sell a call, buy a put) as a hedging strategy. And then there's the call you sell when you just want to make money by collecting premiums--you sell a call at a higher price than you think the stock will reach, and hope it doesn't go that high.
Can you explain in detail what a stock option is?
To start with, profit from stock price gains with limited risk and lower cost than buying the stock outright. First example is you buy one Intel (INTC) 25 call with the stock at 25, and you pay $1. INTC moves up to $28 and so your option gains at least $2 in value, giving you a 200% gain versus a 12% increase in the stock.Second example is profit from stock price drops with limited risk and lower cost than shorting the stock. You buy one Oracle (ORCL) 20 put with ORCL at 21, and you pay $.80. ORCL drops to 18 and you have a gain of $1.20, which is 150%. The stock lost is 10%.
What is the tax implication upon exercise of a call option?
Claim the gain or loss, relevant to the holding period of the investment.
Is the sale of stock a gain or loss?
Gain
What are the 2 ways of earning profits from stock?
Interest and capital gain are two ways of earning gain from stock.
If you sell stock do you owe tax on the capital gain of the stock or entire principle amount?
You only owe tax on the capital gain.
What is one benefit in investing in corporation?
The benefit of investing in a corporation is stock ,because if you invest in stock shares then you can gain money when a stock goes up.The benefit of investing in a corporation is stock shares. Because if you invest in stock shares then you can gain money when a stock goes up.
What is one benefit investing in a corporation?
The benefit of investing in a corporation is stock ,because if you invest in stock shares then you can gain money when a stock goes up.The benefit of investing in a corporation is stock shares. Because if you invest in stock shares then you can gain money when a stock goes up.
What is one benefit for shareholders investing in a corporation?
The benefit of investing in a corporation is stock ,because if you invest in stock shares then you can gain money when a stock goes up.The benefit of investing in a corporation is stock shares. Because if you invest in stock shares then you can gain money when a stock goes up.
What is one benefit for shareholders of investing in a corporation?
The benefit of investing in a corporation is stock ,because if you invest in stock shares then you can gain money when a stock goes up.The benefit of investing in a corporation is stock shares. Because if you invest in stock shares then you can gain money when a stock goes up.
