this is going to be the most simple options video on youtube and we're going to talk
about calls and puts buying calls or buying puts only so this is an introductory video
to options if you've been wanting to get into them or if you're confused by them
don't be because it's pretty straightforward but do keep in mind they're highly risky
investment place and please keep in mind that i'm not a financial advisor and i'm not giving
you financial advice this is for educational and informational purposes only so if we look here we
have a call option we'll look at that first here's the price of the stock over the time
frame and basically you can buy a call in a stock or you can buy a put in a stock so a call you're
betting that the stock price will go up and in a put you are betting that the stock price will go
down over time very simple right let's just keep things very very simple so the essentials
of options trading options contracts offer the buyer the right but not the obligation to buy
either a call option or sell a put option the underlying asset at an agreed upon price during
a certain period of time or on a specific date so if you buy a call it's giving you the right
but not the obligation to buy the stock at the time of expiration you have the right
to purchase those hundred shares if the stock is at the price that you bet upon put options however
allow selling of those shares at a specific time so it's the opposite they're inverse
again the puts you think the stock price is going to go down the call the calls you think the stock
price is going to go up so let's take a look at an example of this we're going to look at apple
uh the option chart on apple for march 11 2022 this is yahoo's page so you can look at this
yourself as well so all of these numbers in the blue means that the stock is in the money meaning
the stock price is already at that level so as you can see 160 244 so these are all in the money
they're all already at the strike price and these are out of the strike price so let's say you think
by march 11th the stock price is going to be at 170 this is the price of the option you see
three different prices here the last price is the price that it was last sold at the bid
is the offer price and the ask is what the seller wants for it so let's just look at the last price
to keep things simple so if you think it's going to be at 170 by the end of the week
it would cost you six cents for one contract so again that's a hundred shares so each share is
six cents you would time this but times this by a hundred right which would be six dollars
so the open interest is over here that's how many contracts there are out there
so here's the volume and how many contracts and this is the percentage gains or losses
currently now if you are to buy a put as you can see these are not in the money these are
not in blue these are in blue meaning they're out of range so the prices again was 165-ish
so it's uh 160 250 and so on and so forth let's say you think it's going to be 150 by the end of
the week the contract will cost you 11 cents per share or 11 per contract or 100 shares
okay and if it hits 150 you would make a profit or anything between 160 and 150
and i'm gonna show you how to calculate your potential profits
if you go to option strat this is a great resource i'll link this in the description
as you can see let's put march 11th that's the date that we looked at
and the price this is the strike price for a call we looked at 170
so this is how you can see what you would make if it hit if it hit 170
this would be your profit per contract and also by time frame so friday is the expiration
or the expiry for that particular contract and as you can see it goes by time
so this is how how much you would make
now if you were to buy a put and then we looked at the 150 price and this is 150 right here
so if it hit 150 by friday you would be at 1250 dollars for your 11 dollar bet
so as you can see it's highly explosive profit potential but also highly risky because what's
the chance of apple tanking in two days to 150 but if it hit 160 you would still make 251 dollars
so this shows you what you would make at what price
155 750 if it was a 165 you obviously wouldn't make you would lose your premium so one thing
to remember you can only lose what you put down if you bought a put
right at 150 again it's 11 11 cents times 100 because it's 100 shares you would only lose your
11 you can't lose any more than that and that's why i like these two strategies they're somewhat
safe within the realm of options and again if you bought a call six dollars for the 170 strike price
the most you can lose is six dollars if now here's the thing if the strike price hits
170 or if apple hits 170 by friday you have the right to purchase those 100 shares at this price
so that's the kicker and that's options in a nutshell if you have any questions leave a
comment and i'll make more videos addressing it but this is a very simple way to look at
it without all of the mumbo jumbo so thanks for watching and again leave a comment like the video
and uh hopefully we'll talk soon take care