call options

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galway_blow_in

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not sure if this question is allowed so if its not , i appologise in advance

its about call options which ive never owned BTW , say i buy jamauary 15 $ 130 calls today while a stock is priced @ $100 , if the stock is priced above $130 on the strike date of january 15 , i know i am allowed excise the option or buy it , my question is , if i chose to buy it and keep it , what price do i get to buy the 100 shares at ( each option being 100 shares ) , someone told me that you get to buy the stock at the price the share was at on the day you purchased the options but surely this is incorrect ?
 
The option gives you the right to buy the stock at $130 so that's what you would pay ie the strike price.
 
demoivre said:
The option gives you the right to buy the stock at $130 so that's what you would pay ie the strike price.
Click to expand...

hi , yeah , i found a web video on youtube which explains it all , its clear as crystal to me now , say for example the call option ( with a $130 price strike on january 15 ) is bought today for around $5 while the stock is priced @ $130 , thats an investment of $500 , say a price of $145 is hit on january 15 , i can buy 100 shares of the stock at $130 and sell them for $145 which is a $1500 gain from a $5000 investment
 
demoivre said:
The option gives you the right to buy the stock at $130 so that's what you would pay ie the strike price.
Click to expand...

sorry , one more question

say i bought a put option today ( $26 strike price ) which has an expiry date this coming friday , lets say the closing price on the stock today is $30 but for whatever reason the stock opens tomorrow @ $25 ( below the strike price ) , am i obliged to move early or can i still wait until fridays expiration date ?
 
demoivre said:
You can exercise the option at any time up to expiration date.
Click to expand...

thanks , i closed the position around four hours before the closing bell , gained $50 on a $50 original spend , just one more thing , had i chose to exercise ( id have gained $100 BTW ) , would i have needed to own 100 physical shares prior to expiration , seeing as a put buyer plans to sell the underlying stock , must they own the 100 shares in the first place ?
 
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