1 contract = 100 shares. if you buy one jan 35 LEH call @ 2.20, that costs a total of 220 dollars to you. You do not need to sell to close if you choose to exercise, a sell to close would be if you were long (regular purchase) of a stock. The option price is constantly changing and you can always sell the option at the current market price. Also, you can exercise if the option is in the money, say LEH is trading at 40, you exercise your call at 35, your profit is 2.80 (40-(35+2.20)) x 100 shares or $280. When you exercise you actually buy the stock at 35 and then you can sell at the market price of 40. Hope this helps.

Welcome to the volatile world of options trading… I am relatively new to the game as well.

First comment, you can trade October options (and later) right now. You don’t have to wait for 9/22 to start.

Remember that 1 contract generally = 100 shares

So, for example, if you buy 10 contracts @ 0.20 cents, it will cost you $200 plus commissions (call or put). That is a “Buy to Open”.

I don’t have an E-Trade account so I don’t know how to exercise an option rather than “Selling to Close”. That is a good question. I couldn’t easily figure it out from the Fidelity website either.

I think you are better off utilizing options for ETFs (index or sectors). The strike prices are generally closer together (separated only by $1 for the SPY, XLF, XLE, UYG, SKF, etc.) and the volumes are higher which makes them a bit easier to trade.

Also, because of the thin trading volumes, I strongly discourage using Market Orders (use Limit Orders instead) and be careful with the prices you use for Limit Orders as well. Don’t chase a huge “gap” open…

Read the link below, and also check out Investopedia for more information. Those are 2 good sources.

1. 10, because 1 contract = 1 call or put
2. you should use “sell to close” order