"When the stock price is $67, it's less than the $70 strike price, so the option is worthless. But don't forget that you've paid $315 for the option, so you are currently down by this amount."
This is misleading and wrong. The option is not worthless. If so, why would he ever have paid $315 for it?
I understand that the leverage and high potential returns from just buying call options on a stock and waiting for it to go up look awesome, but this description of option trading to a new trader does him no favors, since it misses the entire point of what an option really is and how it is priced in the marketplace.
This is misleading and wrong. The option is not worthless. If so, why would he ever have paid $315 for it?
I understand that the leverage and high potential returns from just buying call options on a stock and waiting for it to go up look awesome, but this description of option trading to a new trader does him no favors, since it misses the entire point of what an option really is and how it is priced in the marketplace.