DNN option study.

DNN 2.16 (2.93% down today) 

current 27.01 share 

AVG 1.84$ 

H 2.24

L 2.15 

O 2.24 

52H 2.47

EXPIRATION ON September 19 

 

what is an option? 

an option is a contract that give you the right but not the obligation to buy or sell a stock at a certain price ( strike price ) before expiration. 

Each option control 100 share of the stock you pay the premium the option price .

Type of options 

Call option (buy call ) 

give you the right to buy the stock at the strike price. 

You make money if the stock price goes up 

example 2 $ call premium 0.30 

break even 2.30 

If DNN rises to 3 dollar your option is worth 1 $ dollar 

Profit 0.70 ( $ 70 in total ) 

buying a call =bullish ( you think stock goes up ) 

put option ( buy put ) 

give you the right to sell the stock at the strike price 

you make money if the stock price goes down 

example 2.5 put premium 0.40 

breakeven 2.10 if DNN fall into 1.80 your option is worth 0.70 profit 0.30 ( 30$ total ) 

Buying a put 

Bearish you think stock goes down 

How to read the chain 

strike price 

 The price where you can buy call or sell put 

Premium (e.g 0.30 ) what you pay for the option 100 share 

breakeven the stock price where your profit 0 strike +- premium

 expiration date september 19 

if you think DNN goes up buy 2$ call 

if you think DNN go down buy 2.5 put break even 2.10 

key difference 

call = right to buy bet to up 

put right to sell bet on down