Sterling Terrell

smart ideas from books (mostly)

  • Home
  • About
    • My CV
    • Books
    • Series
  • Newsletter
  • Advertising
  • Tools
You are here: Home / Potpourri / Buy a Call: What Does It Mean?

Buy a Call: What Does It Mean?

Buy a Call: What Does It Mean?

What does it mean to “Buy a Call” on a commodity, stock, or index?

This simply refers to: The buying of a call option.

A “call” option is the right to “buy.”

(Whereas, a “put” option is the right to “sell.”)

The most common example of options is in real-estate.

One buys the right, but not the obligation, to buy a property at a set price within the next so many days.

It is the same for an option on a stock or commodity.

Buying one call option on cotton at 70.00 cents/lb. gives me the right to buy 100 bales of cotton (or one futures contract on cotton) for 70.00 cents/lb. anytime between now and the option’s expiration date.

If 2.00 cents/lb. is paid for the option, and the price of cotton goes up by 10.00 cents/lb, the profit is 8.00 cents/lb.

Buying a call option limits the potential loss to the premium paid for the option – while the potential gain is unlimited.

Share this:

  • Click to share on Facebook (Opens in new window)
  • Click to share on Twitter (Opens in new window)
  • Click to share on Pinterest (Opens in new window)
  • Click to share on Tumblr (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)
  • Click to share on Reddit (Opens in new window)
  • Click to share on Pocket (Opens in new window)
  • Click to share on WhatsApp (Opens in new window)

Related

Filed Under: PotpourriTagged With: #Options, #Trading

Privacy & Cookies: This site uses cookies. By continuing to use this website, you agree to their use.
To find out more, including how to control cookies, see here: Privacy Policy

Subscribe to Blog via Email

Notifications of all new posts by email.

Connect

  • Facebook
  • LinkedIn
  • Pinterest
  • Twitter

Search

Top Posts

  • The Tricky Lily Pad Riddle (You Probably Can't Solve)
    The Tricky Lily Pad Riddle (You Probably Can't Solve)
  • How Neat Handwriting Is For The Birds
    How Neat Handwriting Is For The Birds
  • 31 Persuasion Tips That I Learned From Scott Adams
    31 Persuasion Tips That I Learned From Scott Adams
  • Wonder Park Pi Song (Watch It Stick In Your Head)
    Wonder Park Pi Song (Watch It Stick In Your Head)
  • Instabooks 169
    Instabooks 169
  • 2 Reasons Analogies Fail In Persuasion
    2 Reasons Analogies Fail In Persuasion
  • My Notes On, A Walk In The Woods, By: Bill Bryson
    My Notes On, A Walk In The Woods, By: Bill Bryson
  • Can You Solve The Bat And Ball Riddle?
    Can You Solve The Bat And Ball Riddle?
  • Rectal Earache?
    Rectal Earache?
  • This Is How To Draw A Simple Singing Face
    This Is How To Draw A Simple Singing Face

Supporting = Loving

Buy Me a Coffee

Recent Posts

  • Shoe Will Be The Next To Drop
  • Random Thoughts – 383
  • Asymmetric Opportunities To Tilt Luck
  • Where I Sit 26
  • X.com

Copyright © 2023 · Generate Pro On Genesis Framework · WordPress · Log in