: You own the stock and sell a call against it. This generates immediate income (the premium) but caps your potential profit if the stock price soars.
: The date the contract expires. If not used by then, it usually becomes worthless.
: The cost you pay (as a buyer) or receive (as a seller) for the contract. OPTION TRADING
: You receive the premium upfront, but you take on the obligation to fulfill the contract. Selling "naked" (without owning the stock or cash) carries potentially unlimited risk if the market moves sharply against you.
Options trading involves buying or selling contracts that give you the right—but not the obligation—to buy or sell an asset (like a stock or ETF) at a set price within a specific timeframe. : You own the stock and sell a call against it
: You buy a call if you expect the stock price to rise. Your risk is limited to the premium paid, but potential profit is theoretically unlimited.
: The agreed-upon price at which the asset can be bought or sold. If not used by then, it usually becomes worthless
: A Call gives you the right to buy; a Put gives you the right to sell.