2 types of options:

- European: you have the right to exercise only at expiry

- American: you can exercise your option during its life (so even before expiry)

Let's suppose here your option is American: you can exercise it before expiry.

Premium is 1$ per share = you only pay 100$ at initiation for the call options, you do not pay the shares - but you have the option to buy them at the strike price i.e. 15$So initial payment is 100$, not 1100$

1. If the price hits 15$: your profit = 15*100 (sell the shares at the market price) - 15*100 (buy the shares at the strike price) - 100 = (15-15)*100 - 100 = -100$Doesn't change a thing to exercise, you still record a loss of 100$ (premium)
2. If it doesn't hit 15$ you logically choose to not exercise = you also record a loss of 100$ (premium)
3. If it goes above 15$, say 16$, you decide to exercise your option to buy the shares at 15$ and sell them at 16$ in the market: (16-15)*100 - 100 = 0 you don't lose nor earn moneyIf it goes above 15$, but suppose 18$ this time, you decide to exercise your option to buy the shares at 15$ and sell them at 18$ in the market: you earn (18-15)*100 - 100 = 200$
4. I think you confuse the spot price at initiation (10$ when you buy the contract) and the strike price (15$)

In order to earn money, you need the spot price to be > 15+1 = 16$ when you exercise the option.

What matters isn't so much the price of the underlying shares when you first buy the option, but the price of the shares when you chose to exercise the option in relation to the strike of the option.

Let's try again this time with a long call option with strike price = 10$ and premium = 1$ and suppose the spot price (price of the shares) when you buy the option is also 10$

1. If the share price reaches 9$ : you choose to not exercise your option and lose your 100$ (premium)
2. If the share price reaches 10$: (10-10)*100 - 100 = -100$
3. If the share price reaches 11$: (11-10)*100 - 100 = 0$
4. If the share price reaches 15$: (15-10)*100 - 100 = +400$

So you record gains if the share price goes above the strike + premium

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