Beginner question for option profit

[phenomenia]

Hello, I’m completely new to options and have 2 basic questions:
When I buy a call, let’s say a 21 feb 155 from DIS for 0.27 does that mean I pay now 27 cent (or 100x 27 cent?) and get the right to buy 100 Disney stocks at the 21 of feb for 155?
If DIS is, let’s say at 150 at the 21 of feb, I would take my right to buy. Do I really need to have $15.000 (100 x $150) in my brokers account to trade this or do I just get the $500 profit (100 x (155 - 150)) to my portfolio?

 

[Bum]

Hello, I’m completely new to options and have 2 basic questions:
When I buy a call, let’s say a 21 feb 155 from DIS for 0.27 does that mean I pay now 27 cent (or 100x 27 cent?) and get the right to buy 100 Disney stocks at the 21 of feb for 155?
If DIS is, let’s say at 150 at the 21 of feb, I would take my right to buy. Do I really need to have $15.000 (100 x $150) in my brokers account to trade this or do I just get the $500 profit (100 x (155 - 150)) to my portfolio?

DIS Feb 155C = .27 x 100 = $27 (cost to purchase call)
Max. Loss = $27
Breakeven price = 155.27 (DIS stock price)
Only need $27 in account for this trade. Not required to purchase stock when purchasing a call.
If DIS at 150 on Feb21, then option worth $0 so you lose $27. Trade over.
Option is worth $0 if DIS below 155 on Feb21.

 

[phenomenia]

DIS Feb 155C = .27 x 100 = $27 (cost to purchase call)
Max. Loss = $27
Breakeven price = 155.27 (DIS stock price)
Only need $27 in account for this trade. Not required to purchase stock when purchasing a call.
If DIS at 150 on Feb21, then option worth $0 so you lose $27. Trade over.
Option is worth $0 if DIS below 155 on Feb21.

Thanks for the fast answer!
Just noticed my mistake in the example. Of course I would assume the stock rises above my strike price when I do the option. So: if DIS is at 160 at the 21 of feb I would get $500 to my account or do I have to have $16.000 (100 x $160) in my account to buy the stock for the 155 and then immediately sell for the 160 to get the $500 profit?

 

[Bum]

Thanks for the fast answer!
Just noticed my mistake in the example. Of course I would assume the stock rises above my strike price when I do the option. So: if DIS is at 160 at the 21 of feb I would get $500 to my account or do I have to have $16.000 (100 x $160) in my account to buy the stock for the 155 and then immediately sell for the 160 to get the $500 profit?

There's no reason to purchase the stock. Just make sure you sell the option prior to expiration.
So if the price of DIS is 160 on the day before expiration, the option will be worth approx. 5.00 ($500)
Your profit = $500-27 = $473.

 

[ChrisDouthit]

155 is to strike price, that is the price you get to buy the stock at. $.27 is what you pay for the option, but because each option contract controls 100 shares of stock you would multiply that times 100 to get a total cost of $27 per contract.

Because you have the right to buy the stock $155 and the stock is only treating $150, you would never exercises contract, meaning you would lose to $27 you paid for this call option.