A stock option gives the holder the right to buy or sell the stock at a stated price during a specified period, such as a week, month, or years. The key is the holder is not obligated to buy or sell but the person that sold the option is obligated to sell at the terms of the option. An example may be you buy a Call and that gives you the right to buy, you wouldn’t buy if you wouldn’t recover some of your cost. So if you have the right to buy apple at $200 and it’s priced at $205 you would execute the option.
All investing involves risk, so Options Dojo can make no warranties or guarantees regarding our Sensei’s selections. Invest with an awareness of your skills, experience and risk tolerance. Options are not suitable for all investors and people can and do lose money.