Now that you know about the lifespan of Options, how do I know which which month Option to buy?

Well, it all depends on the type of trading strategy that you are adopting. One thing is for sure: The further an Option contract is away from its expiration date, the more expensive it is. For instance, at this point in time, buying an GOOG 510 July Call Option costs $15.50.

Buying an GOOG 510 December Call Option costs $42.80!

And you might have guessed, if GOOG share price remained the same, as we get nearer and nearer to December, the cost of buying a the GOOG 510 December Call Option will be decreasing along the way. We also say: the time value of the Options contract is decreasing. And this time value will be decreasing until it becomes zero on the 3rd Friday in December (Expiration Friday in December).

When you buy a Call Option, part of, if not, all the money you paid, goes to the time value of the Option contract. That is, the $15.50 the above example comprises of the time value of the GOOG 510 July Call Option at that point in time. Likewise for the $42.80 for the GOOG 510 December Call Option.