Understanding Options Trading and Its Risks

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0xWolfMember
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#1Oct 14, 2022, 11:23 PM
I've been doing some reading on options trading lately and got into a bit of a thought experiment. Imagine I have 0.5 BTC, and I believe that by January 19, 2025, BTC will hit 120k. If that's the case, I’m thinking about selling a Call option with an expiration on that same date at a strike price of 100k. My thought is that since I predict the price will be above the strike price, the buyer of that Call option won’t actually exercise it, leaving me with both the premium and my BTC. But I have a few questions here: 1. Is this actually how options trading works? 2. If so, how do I figure out what the price of the Call option should be? 3. What are my risks in this scenario? Am I missing something important?
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