Option Examples

All dollar examples below use mid-June 2026 prices (around June 10-18, 2026). Premiums are rounded for teaching; your broker's live chain will differ slightly.

Example One - Basic Call

You did your research on Apple and decided that the stock price will increase before the June monthly expiration. You want to invest approximately $2,400, but the stock is expensive (trading around $291 on June 10, 2026). That budget only buys you about 8 shares. You want more leverage. So you look into options for Apple. You find that the June 19, 2026 $295 strike call will cost you $780 per contract (stated as $7.80). You buy 3 contracts for $2,340 total. The next day, June 11, Apple shares jump to $295.63. You check your option and it is now worth $9.40 per share ($940 per contract).

Do some quick math: your profit is $480. That is 3 contracts * ($940 - $780). If you had bought the stock directly with the same budget, your profit would have been about $37 on 8 shares (($295.63 - $291) * 8). That is the power of options — if you get it right.

Security	Cost	Profit
AAPL stock (8 shares)	$291.33 * 8 = $2,330.64	($295.63 * 8) - $2,330.64 = $36.40
AAPL June 19 $295 call (3 contracts)	$780 * 3 = $2,340	($940 * 3) - $2,340 = $480

This example shows a nice profit — but you could have easily lost most of the $2,340 if Apple had stalled or dropped into expiration. With stock, you would have lost less per dollar and could have waited longer. With the June 19 option, time was working against you every day.

Example Two - Basic Put

You have a bearish view on AMD ahead of its mid-June 2026 earnings. On June 17, 2026, AMD is trading around $518. You buy 5 put contracts on the June 20, 2026 expiration with a $505 strike. The premium is $9.20 per share ($920 per contract), so your total cost is $4,600 plus any commissions or fees.

AMD reports disappointing guidance and the stock drops to $492 the next session. Your puts are now worth about $16.80 per share ($1,680 per contract). Your net profit is roughly $3,800 before fees (($1,680 - $920) * 5).

Security	Cost / notional	Profit
AMD stock (short 100 shares for comparison)	$518 * 100 = $51,800 notional	($518 - $492) * 100 = $2,600
AMD June 20 $505 puts (5 contracts)	$920 * 5 = $4,600	($1,680 * 5) - $4,600 = $3,800

For comparison, the first row assumes you shorted 100 shares and covered at $492. The put position used far less capital but still amplified the move — and would have amplified a loss just as quickly if AMD had rallied instead.

Example Three - Call gone wrong

You got a tip about a thinly traded, low-priced stock poised for a bounce. You buy call options with a $7.50 strike at $0.45 per share ($45 per contract). The tip was wrong — the stock drifts lower and the option bid disappears. Volume is near zero and the spread is wide. You are stuck holding premium that melts away with time.

This scenario is not tied to a date or ticker on purpose: it happens on illiquid names in every market year. Stick to heavily traded underlyings (large ETFs, major stocks) where volume and open interest are healthy and the bid/ask spread is tight, so you have a reasonable chance of exiting if you are wrong.