Quote:
Originally Posted by lewdog
So I'd have a year in that scenario for the stock to hit $24. And if at that time I wanted, could sell that option and make about $450? It doesn't have to reach the strike number?
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You would have one year until expiration to get closer to the strike price PLUS the premium you paid but as the option get's closer and closer to expiration, the time premium begins to disappear. If you are way "OUT of the money", the value begins to drop.
If the stock popped up $3-4 in the next two weeks and the call option jumped to $7.50- $8.00, you an sell at any time.
Also, options have ONE DAY SETTLEMENTS. You buy it today, you need the money available in your account by tomorrow. When you sell, the money is available the next day.