Ok so the guy that we work with is a long time investor (he says). Well, today he was telling everyone about how he bought a call option for Ford. My question is I saw how 1 call option equals 100 shares, so how does one know at the expiration date if he will gain or pay money? I'm used to trading stocks somewhat but these options are new and I want to learn about them before I consider them. Any help is greatly appreciated. Thank you. *Just saw this is probably in the wrong section* If so can admin please move it to the correct forum? Thank you
He won't pay money. He can either excercise the call and purchase the shares at the strike price, sell the call if someone wants it, or let it expire. The call brings no liability, other than the initial cost.
