Look at this options chain
Jul 19, 2014 0.50 0.01 0.45 0.60 40 1402 GLUU 6.00 Jul 19, 2014 0.10 0.05 0.10 10 897
Jul 19, 2014 0.10 0.01 0.05 0.10 40 1184 GLUU 7.00 Jul 19, 2014 0.60 -0.10 0.55 0.70 2 122
Jul 19, 2014 0.05 0 GLUU 8.00 Jul 19, 2014 1.40 1.65 0
the 6,7, and 8 are the strike prices. Basically, an option chain is like insurance. It allows you to buy (call) or sell (Put) at the strike prices. The first numbers are the cost of each share for 100 shares.
To explain further. At a strike price of 6$ I can purchase a call option for 50 cents...left side of the table between the GLUU ticker symbol. This call option allows me to buy 100 shares at 6$ each, but I have to pay an additional 50 cents per share for this "option". Basically, a guy is like, hey I got these shares I bought at 6 bucks. If you think this stock is going to go up, you have the option of buying them from me at 6$...I'll "lock in" this price for you. But you're going to have to pay me 50 cents times 100 shares for this option.
Right now, the price is 6.49, so if I were to buy this option from him, it would cost me 50 bucks. If the stock goes up to 7 dollars, then I can exercise this option and buy 100 shares from him for 6 bucks each and make 100$ minus the 50$ I paid for the option. So a profit of 50 dollars.
If I were to buy the stock now, outright, it would cost me only 6.50, and if I bought 100 shares, I would make the same exact profit.
The point of an option though, is that I don't HAVE to buy the stocks. I buy the options for a fraction of the price and wait til I actually want the shares. Similarly, if the price goes down to 6 I only lose exactly what I paid for the option. The only amount my account is ever hurt during all the run ups and down turns, is 50$. It could run to 12 dollars, or it could go bankrupt. The point is, I only have 50 invested.
Now, looking at this options chain, there are roughly 4000 shares on option at 6 bucks, and another 4000 at 7. I could spend 10$ and get a guaranteed 100 shares when it hits 7$. The lower the price, the more risk is involved. The funny thing about this stock, is that there are only 1200 shares for "sale" as puts. (the right side) That's extremely low compared to the calls. What it means is that the market is extremely bullish on this stock.
