How a call option works. Call options are in the money when the stock price is above the strike price at expiration. ... If the stock price is below the strike price at expiration, then the call is out of the money and expires worthless. The call seller keeps any premium received for the option.

Do calls make a stock go up?

If you recall from the earlier lessons, a Call option gives its buyer the right, but not the obligation, to buy shares of a stock at a specified price on or before a given date. Calls increase in value when the underlying stock it's attached to goes up in price, and decrease in value when the stock goes down in price.

How is the profit of a call option calculated?

To calculate profits or losses on a call option use the following simple formula: Call Option Profit/Loss = Stock Price at Expiration – Breakeven Point.