I have a basic understanding what options are but am unsure how they work exactly.
As an example a stock is currently trading at 50c and options are available for purchase for 20c exerciseable in 2008.
So if I was to purchase the 20c options could I convert them to shares right away OR do I have to wait till 2008 before this is done?
And if I can exercise them immediately how much extra above the 20c purchase price would I have to pay to convert them?
Obviously there must be advantages in buying options otherwise people would not do it... what would that be exactly?
Explanation would be appreciated in such a way that a newbie can understand please.