This gave her the option, but not the obligation, to sell the stock at $13. She didn't want to risk shorting the stock, but she wanted to bet on it falling so she bought a put option for $0.50 with a strike price of $13 when the stock was over $15. Miss Bubbleburster on the other hand made a nice profit on Hype's crash. However, he has only lost the premium he paid. Mr Chase waits till expiry and the stock falls further to $10, which means the options in fact expire worthless. A week later, the stock falls to $13 and the options are now worth only $0.20 as there's only a little chance they would expire in the money. Mr Chase's options have also increased in price and now he could sell them for $1.5 ($150 for one contract) but he decides to wait for an even better price. After one week, the stock has risen to $16.
He's buying one contract (10 options) for a total of $90 plus commission. The price of the option is the so-called premium, which is currently $0.90.
He's buying the $15 call option, which gives him the right (but not the obligation) to buy the stock at the $15 price until expiry, irrespective of the actual price.
He thinks this window will give him enough time to profit if the stock extends its rally.
He checks the so-called option chain of the stock and sees that the next option expiry is in 20 days. He doesn't want to miss a potential rally though, so he decides to buy a call option on the stock instead of buying it outright. Mr Chase thinks there might be still some juice left in it, but at the same time, he's afraid of a downward price correction. Mr Chase really likes a recent hot stock called Hype, whose price has gone up from $10 to $14 in a very short time. Let's have a look at how a handful of traders with different motivations can buy and sell options in the same individual equity.