Could someone please explain the difference between shares and options?
Owning a share in a company is like owning the company itself; a good analogy would be having a piece of a large pie. The more ‘pieces’, or shares you have, the bigger percentage of the company you own. Example: you can own 100 shares of X company at $5.00/share, and if there are 10,000 total shares available, then you own 1% of X company An Option gives you the right, but not the obligation, to purchase a security at a predetermined price. An example would be, say, ETrade: You can buy an option to purchase 100 shares of ETrade at $.50 six months from now, June 8th, 2008. You don’t own the shares yet, rather you own the right to purchase these 100 shares at this predetermined price, no matter what the current price is…
