Okay, I've been trading stocks for the past 6 months or so, and have been mildly profitable. I'm looking into options trading now. I've done considerable research on them, however I still fail to see how they work out in the real world. I would like to start out small, by simply purchasing call options and selling them back in the market if they gain value before the expiration date. Unfortunately, my broker does not allow the selling of put options, so that is out of the question for the time being. My question mainly is this: options are usually only worth anything if they a) the equity exceeds the strike price of the contract, and b) the stock price goes up enough for you to make money back on the option and the commissions, right? If I understand this correctly, that would only apply if you decided to actually exercise the contract ... what about if you simply bought and sold the contract? If you catch the option price at a low, but the stock turns around, and the price of that same option turns around as well ... even if it doesn't hit your strike price, couldn't you still sell the option for a bit more than you paid for it? Example: Company ABC is trading at $21.50/share but dropping at a somewhat steady pace. You purchase 1 ABC 20 call for $1.60 that expires in May 07. The stock drops a bit, but turns around and starts heading upwards ... the ABC 20 option suddenly increases in value, but the stock has not necessarily reached your strike price ... the option would still have increased in value though, say maybe to $200 or so depending on the upward trend? I hope this isn't confusing ... but thanks!