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Strategies & Market Trends : Options for Newbies -(Help Me Obi-Wan-Kenobe) -- Ignore unavailable to you. Want to Upgrade?

To: Walkbarr who wrote (532)	12/21/1997 4:57:00 PM
From: MJR	Read Replies (2) \| Respond to of 2241

Hello: I am thinking of starting to look at options trading on stocks. First, I will start out paper trading, but I have a rather simple question. Let's say XYZ is trading at $10/share and the JAN 11 Option is selling for 1/2. Thus, to by the right to purchase 100 shares of XYZ at $11, I must put up $50 (forgetting about comm charges). If XYZ never hits 11 by expiration day, I simply let the contract expire and my loss is $50.. but let's say XYZ is trading at $15 on January 7th. My question is, how do I realize a gain? Do I simply excersize the option on that day and take home a $450 profit? Is this a "full turn"? This is different than selling the contract, right? What more than simply excersizing the contract do I have to do to avoid having to put up $1500 to buy the 100 shares at $15? Thanks in advance, Mike Happy Holidays!