# Quick Answer: How Much Does It Cost To Buy A Call Option?

This is the price that it costs to buy options.

Using our 50 XYZ call options example, the premium might be \$3 per contract.

So, the total cost of buying one XYZ 50 call option contract would be \$300 (\$3 premium per contract x 100 shares that the options control x 1 total contract = \$300).

## How much does a call option cost?

Calls with a strike price of \$50 are available for \$5 per contract and expire in six months. In total, one call costs \$500 (1 call x \$5 x 100 shares). The graph below shows the buyer’s profit on the call at expiration with the stock at various prices.

## What happens when you buy a call option?

When you buy a call, you pay the option premium in exchange for the right to buy shares at a fixed price by a certain expiration date. Investors most often buy calls when they are bullish on a stock or other security because it affords them leverage. As you can see, the payoff for each investment is different.

## What does it mean to buy a call option?

Definition: A call option is an option contract in which the holder (buyer) has the right (but not the obligation) to buy a specified quantity of a security at a specified price (strike price) within a fixed period of time (until its expiration). For stock options, each contract covers 100 shares.

## How do you value a call option?

Calculate call option value and profit by subtracting the strike price plus premium from the market price. For example, say a call stock option has a strike price of \$30/share with a \$1 premium and you buy the option when the market price is also \$30. You invest \$1/share to pay the premium.