What happens to a bull call spread at expiration?

The maximum risk is equal to the cost of the spread including commissions. A loss of this amount is realized if the position is held to expiration and both calls expire worthless. Both calls will expire worthless if the stock price at expiration is below the strike price of the long call (lower strike).

How does a call option work?

A call option gives you the right, but not the requirement, to purchase a stock at a specific price (known as the strike price) by a specific date, at the option’s expiration. For this right, the call buyer will pay an amount of money called a premium, which the call seller will receive.

What is call option with example?

For example, a single call option contract may give a holder the right to buy 100 shares of Apple stock at $100 up until the expiration date three months later. There are many expiration dates and strike prices that traders can choose.

What does a $1 call option mean?

Call Option is the right to buy something (= underlying asset). If you are trading call options on equities (common stocks), it means you are trading the rights to buy the stocks on a certain day for a certain price. Example of Call Option on Stocks. Strike Price: $10. Premium: $1.