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Call Options as Leverage: CNBC Explains

Sunday, 29 May 2011 | 12:00 AM ET

In previous videos, we've explained call options in detail. You learned that if the stock price goes up, call options allow you to make more profit per invested dollar, compared to simply buying a stock. By putting less money on the table to magnify profits, call options can have the same effect as investing with borrowed money, which is known as using leverage. Salman Khan of the Khan Academy explains.