What is the maximum you could lose if you bought each option? Options are a means to
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What is the maximum you could lose if you bought each option?
Options are a means to leverage your position and increase the potential returns, but they also magnify the potential for loss. Select two of your ten stocks and locate prices for the stocks and for call options on those stocks. (Many Internet sites have option prices as well as stock prices.) Select three call options on each stock:
a. A call whose strike price exceeds the price of the stock (an “out-of-the-money” call)
b. A call whose strike price approximates the price of the stock (an “at-the-money” call)
c. A call whose strike price is less than the price of the stock (an “in-the-money” call)
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