If the stock skyrockets, you are obligated to sell the shares at the strike price, missing out on all gains above that level.
Most brokers require a brief application to "unlock" options trading levels.
You buy a call if you expect the stock price to rise significantly. You pay a fee called a Premium . buying and selling call options
Note: Only sell "Covered Calls" (where you already own the shares) to limit risk. Selling "Naked Calls" has infinite risk and is not recommended for beginners. Limited to the premium received. 4. Key Terms to Know
You don't have to wait for expiration. You can "sell to close" a bought call or "buy to close" a sold call at any time to lock in profits or cut losses. If the stock skyrockets, you are obligated to
Options lose value every day they get closer to expiration. As a buyer, time is your enemy; as a seller, time is your friend.
Theoretically unlimited. As the stock goes up, the value of your option increases. You pay a fee called a Premium
The stock price rises above your strike price plus the premium you paid (the Breakeven ).