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Call Options: CNBC Explains

CNBC Explains
Friday, 3 Jun 2011 | 10:36 AM ET
Call Option Payoff Diagrams: CNBC Explains
For many sophisticated investors, trading options is a routine practice that can be hugely profitable, but retail investors can also transact options contracts on the open market. It's a strategy with potential to enhance investors' portfolios and to help them better navigate the market. Want to succeed at trading options? You need to understand exactly how these contracts work. Salman Khan of the Khan Academy explains how call options pay out.
Call Options: CNBC Explains
For many sophisticated investors, trading options is a routine practice that can be hugely profitable. Salman Khan of the Khan Academy explains call options: contracts you purchase if you think a stock will go up in the near future.

For many sophisticated investors, trading options is a routine practice that can be hugely profitable. But did you know that retail investors can also transact options contracts on the open market? It's a strategy with potential to enhance investors' portfolios and help them better navigate the market. Want to succeed at trading options? You need to understand exactly how these contracts work. Salman Khan of the Khan Academy explains call options: contracts you purchase if you think a stock will go up in the near future.

From the first video, you’ll understand:

  • How call options compare to buying a stock
  • How options can help minimize risk for investments
  • What the profit/loss diagram looks like for call options



From the second video, you'll understand:

  • What the profit/loss diagram looks like for call options
  • How the price of an option influences buying decision

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