Options Trading OPTIONS TRADING!!!?
Question:
What do the following mean:
Buy to Open
Buy to Close
Sell to Open
Sell to Close
Im trying to buy calls, once I buy them how do I make money on them? How do I sell them exactly?
When buying calls is it true the most you can lose is the amount you invested?
Also, on the screen I see some stocks that say Calls [55] and other stocks that say Calls [45] at the top of the screen, its not the price so what does it mean?
When buying calls under quantity if I put 1 does that mean im buying 100 shares?
Answer:
1. For the meaning of the 4 transactions, see http://www.theoptionsguide.com/options-t...
2. To make money on buying calls, the price of the underlying stock must go up. Once the underlying stock price goes up, the price of the call will go up as well. When you want to take profit, simply sell the call by entering a sell-to-close transaction.
3. The numbers 45 and 55 are strike prices. For call options, strike price is the price at which you can buy the shares when you exercise the options while for put options, that is the price at which you can sell the underlying shares.
4. Each option contract represents 100 shares.
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