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Last post 6 hours, 17 minutes ago by surfkw. 5 replies.
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  •  05-12-2008, 2:19 AM 28912

    Options - 1 contract estimated total cost $410?

    Reply Quote

    Hello,

     This is my first time ever trying to play Options. I was reading about it and understand completelly how its supposed to work. However, I don't understand the logic behind the following that ZECCO displays to me:

     

    Confirm Options Order
       
     
     
    Date
    05/12/2008
     
     
    Time
    setDateTime(' 05/12/2008','02:13:20 EDT',8,''); 02:13 AM
     
    Details
    Buy to Open  VEP  1  Contract

    Market  N/A  DAY
    Estimated total cost $410.00
     
     
    Quote
    Visa Inc. Class A Common Stock  (VEP: OPRA)   CALL
    Expiration Date  05/17/2008  Strike Price  $80.00
    Bid  4.00  Ask  4.10  Last trade  4.10

     

     I understand that I have until the expiration date to exercise the Stock, and if I will exercise it I will pay $80 per share. But how many shares will I be able to get at that price?

     Why is the ESTIMATED TOTAL COSTS above $410?

     Isn't 1 contract = 1 stock?

     Also, is INTEREST supposed to mean anything to me? I see it when I am browsing the options available, for example:

     

    Action Sym Last Chg Vol Bid Ask Interest Strike

    checkLastPrice(' 05/12/2008 02:18:18 EDT', '45.00', '83.13', 'Call', 'Last as of'); checkLastPrice(' 05/12/2008 02:18:18 EDT', '50.00', '83.13', 'Call', 'Last as of'); checkLastPrice(' 05/12/2008 02:18:18 EDT', '55.00', '83.13', 'Call', 'Last as of'); checkLastPrice(' 05/12/2008 02:18:18 EDT', '57.50', '83.13', 'Call', 'Last as of'); checkLastPrice(' 05/12/2008 02:18:18 EDT', '60.00', '83.13', 'Call', 'Last as of'); checkLastPrice(' 05/12/2008 02:18:18 EDT', '62.50', '83.13', 'Call', 'Last as of'); checkLastPrice(' 05/12/2008 02:18:18 EDT', '65.00', '83.13', 'Call', 'Last as of'); checkLastPrice(' 05/12/2008 02:18:18 EDT', '67.50', '83.13', 'Call', 'Last as of'); checkLastPrice(' 05/12/2008 02:18:18 EDT', '70.00', '83.13', 'Call', 'Last as of'); checkLastPrice(' 05/12/2008 02:18:18 EDT', '72.50', '83.13', 'Call', 'Last as of'); checkLastPrice(' 05/12/2008 02:18:18 EDT', '75.00', '83.13', 'Call', 'Last as of'); checkLastPrice(' 05/12/2008 02:18:18 EDT', '80.00', '83.13', 'Call', 'Last as of'); checkLastPrice(' 05/12/2008 02:18:18 EDT', '85.00', '83.13', 'Call', 'Last as of');
    Trade VFI 42.60 0.00 0 37.90 38.30 169 45.00
    Trade VFJ 34.80 0.00 0 32.90 33.30 125 50.00
    Trade VFK 30.20 0.00 0 28.00 28.30 119 55.00
    Trade VFY 27.30 0.00 0 25.60 25.90 259 57.50
    Trade VFL 23.50 0.00 0 23.10 23.40 751 60.00
    Trade VFZ 22.00 0.00 0 20.70 21.00 863 62.50
    Trade VFM 18.70 0.00 0 18.40 18.70 2036 65.00
    Trade VFU 16.50 0.00 0 16.20 16.50 1947 67.50
    Trade VFN 14.10 0.00 0 14.00 14.40 6404 70.00
    Trade VFV 12.30 0.00 0 12.10 12.40 3114 72.50
    Trade VFO 10.50 0.00 0 10.30 10.60 4510 75.00
    Trade VFP 7.40 0.00 0 7.40 7.50 7068 80.00
    Last as of: 05/12/2008 02:18 AM 83.13
    Thanks for the help!

  •  05-12-2008, 2:50 AM 28913 in reply to 28912

    Re: Options - 1 contract estimated total cost $410?

    Reply Quote

    Also,

     

     Can you guys please tell me if at the moment I purchase the Option if I will pay the $410 out of pocket right there?

  •  05-12-2008, 8:12 AM 28918 in reply to 28913

    Re: Options - 1 contract estimated total cost $410?

    Reply Quote
    1 option contract = 100 shares of stock; therefore, at 4.10, the total cost for 1 contract is $410.  And yes, you will pay the $410 out of your pocket right there.

  •  05-12-2008, 10:25 AM 28928 in reply to 28913

    Re: Options - 1 contract estimated total cost $410?

    Reply Quote
    Like the other person who replied, 1 contract = 100 shares, now important thing to remember is if you exercise that option if the strike is $80 you will be buying 100 shares at $80 means you will need $8,000 dollars 100x80 = $8,000. If you dont sell the option before the exercise date and you are " in the money" it automatically exercises, if you dont have the 8,000 to pay for it, you account will go into a margin call, in that case if you dont put the money in to cover the call, or sell the stock, usually they sell the stock that was exercised, either way you'd have your profit. But just somthing to remember.

  •  05-12-2008, 11:45 AM 28933 in reply to 28918

    Re: Options - 1 contract estimated total cost $410?

    Reply Quote
    thanks all of you.

  •  6 hours, 17 minutes ago 29209 in reply to 28928

    Re: Options - 1 contract estimated total cost $410?

    Reply Quote
    Correct me if I am wrong but I am pretty sure when you are exercising an option you don't have to have have the cash on hand to cover all the shares.  The 100 share per contract will be 'bought' and 'sold' at the same time upon exercise so if you paid your $410 for the 100 contracts at 4.10 each when you exercise you will pocket the final (price-exercise price)*100.  Option are a way to use leverage, control more stocks with less money but you risk losing all of your money if your option expires out of the money. 
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