I'm a newbie with all of this. I've been reading on call options and from my understanding, you're paying some "premium" to buy an "option" to buy the stock at a certain fixed price. Is this right?
So how come we can buy options on robin hood where the break even point is lower than the market price? Isn't that just free money? I don't understand.
For example, I just bought an after-hours call for PLTR at $0.37 per share for a total of $37 with a break even price at $8.37. PLTR was already at like $8.75-9.00. Will robinhood still execute my order in the morning?
I also noticed that there are many options you can buy where the strike is less than the market value. So how exactly does this makes sense? I mean, we can't all be getting "free money" can we?