Buying And Selling Call Options May 2026

You buy a call if you expect the stock price to rise significantly. You pay a fee called a Premium .

The stock price is lower than the strike price.

Stock XYZ is at $100. You buy a $105 Call for $2. If XYZ hits $110, your option is worth at least $5. You turned $2 into $5 (a 150% gain), while the stock only moved 10%. 3. Selling Call Options (Bearish/Neutral)

Short-term dates (weeks) are cheaper but riskier; long-term dates (months/years) give you more time to be right.

If the stock skyrockets, you are obligated to sell the shares at the strike price, missing out on all gains above that level.

You sell (or "write") a call if you think the stock will stay flat or drop. You receive the Premium upfront from a buyer.

Theoretically unlimited. As the stock goes up, the value of your option increases.

Limited to the premium you paid. If the stock doesn’t reach the strike price by expiration, the option expires worthless, and you lose 100% of your investment.