In order for a stock option to be executed does it have to be above/below the price for a call/put?

Answers:0   |   LastUpdateAt:2012-08-02 20:32:02  

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Anika Bennett
Asked at 2012-08-02 20:32:02
I've been reading a lot about stock options , but I can not seem to find the answer, I see the stock options that have the calls ( to buy at a given price ) and put (to sell at a specified price ) . I wonder does the stock price has to be at a point determined by the options to be exercised?

For example , a stock is trading at $ 1 - If you buy a put option for $ 7.00, but the action never rises above $ 2 , you can use its option to sell shares at $ 7.00 despite the population is far from it ?

Conversely , if a stock is $ 5 and you buy a call to buy shares at $ 1, but the stock goes up or never comes close to $ 1, you can still buy shares at $ 1? How would that effect if you could not because I could buy a lot at $ 1 and make a profit if the stock is trading at $ 5?
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