The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone, Kirk here again and welcome back to the daily call. On today’s call, I want to answer the question – “Why did my option move as much as the underlying stock?” This is a popular question actually. In fact, I think it’s one that’s just very common if you're new to trading options. But honestly, if you’ve been trading options for a while, you still might question this and here’s where this really comes from or here's the setup that this comes from. Let’s say that you are long a call option on the stock at $50 and your strike price is at $50. Naturally, most people think that because your strike price on your long call option is at $50 and the stock is at $50 that any move higher in the stock is going to see an exponential or at least a 1:1 move higher in the option contract that you’re long. The next day happens and the stock moves $2 higher. The stock moved $2 higher, but now your call option drop in value. This is where people go crazy. They literally start pulling out their hair, they have no id