A Simple Guide to Options Premium — With Example

Options Premium

Today I want to talk about options premium, what it is, and I’ll show you a very specific example.

Many people are struggling to understand how options premium work.

As you know, I have been selling puts recently during this the stock market crash and have been doing really well.

Now I want to show you exactly what I’m doing, and why I’m doing it.

Let’s get started.

SPCE Example

I want to use a specific example of SPCE, because that is an option that I’m currently trading.

And I want to show you exactly how it works.

Let me first bring up the chart of SPCE. It’s Virgin Galactic.

You can see right now, the stock is trading at $16.65, this is the current price.

Now, I want to do two things.

First of all, we want to consider call option with a strike price of $18, and I also want to show you a strike price of let’s do $15.

You see the $16.65, the current price. When we buy a call option for $18, it means that now we can buy this stock for $18.