There are two types of options that allow you to bet on a stock going up or down: calls and puts 👯

Let’s explore call options ➡️

A call option gives you the right to BUY a stock at a certain price 📈

Let’s say you buy a call option for one share of Nike stock with a strike price of $100 👟

If Nike’s stock price goes up to $120, you can exercise your option to buy the stock for $100 and sell it for $120, making a $20 profit 🤑

💡When you exercise your option, you don’t actually need to spend $100 to buy the stock – you just pocket the $20 profit!

But if Nike’s stock price stays below $100, you can’t exercise your option, and you’d lose the premium you paid for the option unless you sell it to someone else 💵

So now you know that call options are what you’d use if you think a stock’s price will go UP past a certain price.

Next, let’s learn about its evil twin: put options! 😈