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+12  •   The Intelligent Option Investor
+Visual Representation of Call Options
+In a similar way that we created a diagram of the risk-reward profile of owner-
+ship in a common stock, a nice way of understanding how options work is to 
+look at a visual representation. The following diagram represents a call option.
+There are a few things to note about this representation:
+5/18/2012
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+5/20/2013 249 499
+Date/Day Count
+Stock Price
+749 999
+GREEN
+1. The shaded area (green) represents the price and time range over 
+which the investor has economic exposure—I term this the range 
+of exposure. Because we are talking about call options, and because 
+call options deal with the upside potential of a stock, you see that 
+the range of exposure lies higher than the present stock price 
+(remember, “Call up”). 
+2. True to one of the defining characteristics of an option mentioned 
+earlier, our range of exposure is limited by time; the option pictured 
+in the preceding figure expires 500 days in the future, after which 
+we have no economic exposure to the stock’s upside potential. 
+3. The present stock price is $50 per share, but our upside exposure only 
+begins at $60 per share. The price at which economic exposure begins 
+is called the strike price of an option. In this case, the strike price is 
+$60 per share, but we could have picked a strike price at the market price 
+of the stock, further above the market price of the stock (e.g., a strike 
+price of $75), or even below the market price of the stock. We will inves-
+tigate optimal strike prices for certain option strategies later in this book.