Bryan Robinson T TH 1 pm Options             Options can have a certain allure to investors of all types. There are many different ways to use options to your advantage, but we must understand what an option is. You can buy a stock option on the stock of your choice. In order to purchase the option you must pay a premium. The premium is a non refundable payment which gives you the right to purchase the stock at a later date at what is called the exercise price. The exercise price is a fixed price that you can “cash” your option in for. There are put and call options. With a call you are expecting the price to go up on the stock and with the put you are expecting it to decline. An example of a call option: the stock price is $5.00 and your exercise price is $5.25. If you purchase one call option you have the right to purchase 100 shares at the exercise price. For the right to do this you must pay the premium. The option does not last forever, only for a certain period of time. Now with our example should the stock go above $5.25 we would exercise our option. If the stock was at $5.50 we would make .25 per share because we can buy at $5.25. Should the stock fall decrease we would not purchase the option.             That was a very primitive description of how an option operates. Options are purchase on organized exchanges and are regulated. Options are not only limited to stock, there are also currency options and commodity options. Options can be a great way for investors to make money. You only have to put up a limited amount of money up front and have the potential for an unlimited gain and limited loss (your premium). Options are something I have been studying recently and will look into using to my advantage in the future.       Citations Shapiro, Alan C., and Atulya Sarin. Foundations of Multinational Financial Management. Sixth ed. Hoboken, NJ: John Wiley & Sons Inc., 2009. Option (finance). (2009, May 1). In Wikipedia, The Free Encyclopedia. Retrieved 01:20, May 14, 2009, from http://en.wikipedia.org/w/index.php?title=Option_(finance)&oldid=287352681