4. options trading strategies

Example: Call Option

To get a clear idea of how an options trade works, here’s an example for

As of this writing, the price for a single share of Amazon is $3,302.09. The order pictured below would give you exposure to 100 shares of Amazon at $3,300 per share with an expiration date of June 17, 2022, for a price of $306.30.

The order input screen for Amazon (AMZN) stock options at Ally Invest

If you were to buy this option, the Amazon share price must be around $3,303 to break even. Assuming the stock price is $3,304 on the expiration date, you would earn a profit of about $94. If the price is higher, you make more. But if the stock price is $3,303 or below, you would be better off letting the option expire without exercising it, and your total loss would be the $306.30 paid for the contract.

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