Is the call option price of a stock a good indicator of future value?

<<<Is the price of a call option a good indicator of future value of a stock?>>>

It is not a good indicator of the direction the stock price will move in the future.

It is a good indicator of how volatile the stock price is expected to be in the future.

<<<If all the strike prices "out of the money" are all nearly worthless (< $.06), is this a good indicator that option buyers are not expecting the price of the stock to increase?

Assuming there is a strike price relatively close the stock price (measured as a percentage of the stock price) and there is a a reasonable amount of time before expiration, it is a good indicator that option traders to not expect the price of the stock to move much, either up or down, prior to expiration.

<<<Additionally, would this not be a good stock to purchase since they are not expecting the price of this stock to rise?>>>

It would not be a good stock to buy if you wanted a stock that was likely to have a big change in its price. It would be a good stock to buy if you wanted a stock that was likely to have a more stable price. The price of the option does not indicate if the price is likely to rise of fall.

-----

The price of a call option is calculated from
(1) the stock price
(2) the strike price
(3) the amount of time until expiration
(4) the "risk free" interest rate
(5) the implied volatility and
(6) (sometimes) the amount expected to paid in dividends prior to expiration.

With the exception of implied volatility, you can easily look up all of these values. Implied volatility is the amount of volatility option traders expect in the stock price prior to expiration. By looking up the other values and plugging them into the price formula, to can determine the implied volatility from the price of the option. The higher the price of the options, the more volatility expected.

-----

You should also understand that professional options traders, as well as quite a few amateurs, would be just as happy to buy a put option as a call option if they expect the price of the stock to go up. A person buying a put option and the underlying stock has the same risk-reward profile as a person buying a call option. Similarly, he would be just as happy to buy a call option as a put option if he thinks the stock is going down. A person buying a call option and selling the underlying stock short has the same risk-reward profile as a person buying a put option. Consequently option prices are worthless for predicting the direction a stock price is going to go.

-----

The value of the put call ratio in predicting the direction the price will move is debatable. Some people trade spreads which can skew the number of calls or puts outstanding. For example, if I bought 100 calls with a strike price of $40 and sold 100 calls with a strike price of $35 I would be bearish of the stock price but I probably would have increased number of calls outstanding. I have seen some people I respect indicate it is a valid indicator, and I have seen other people I respect say it is worthless as an indicator. I will remain neutral and avoid taking a position.