"When the stock price is $67, it's less than the $70 strike price, so the option is worthless. But don't forget that you've paid $315 for the option, so you are currently down by this amount." This is misleading and wrong. The option is not worthless. If so, why would he ever have paid $315 for it? I understand that the leverage and high potential returns from just buying call options on a stock and waiting for it to go up look awesome, but this description of option trading to a new trader does him no favors, since it misses the entire point of what an option really is and how it is priced in the marketplace.