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Message: [QUOTE="Brooky03, post: 3704609"] A bet. You’re betting a stock price will hit a certain amount by a certain date. I had bet AMC would hit $3 by February 19th. You pay a premium for the bet, the $88 I spent. The max I could lose is the $88 I paid. My gain is calculated by the difference in the premium for that bet between when I bought and sold it. When I sold it, the premium to buy a $3 call for February 19th had gone up because the stock price was closer to $3 than when I had bought the call option. It was more likely the stock would hit $3 at that point in time. That’s it in the simplest terms. A put option is the same, but you’d be betting the price goes down instead of up. [/QUOTE]