Long Call Stratergy

The long call option strategy is a bullish options trading strategy with a theoretical unlimited profit and a limited loss. Buying call options creates a long position on an underlying asset and limits net downside exposure.


-Buy 1 call option

Note: like most options strategies, calls can be purchased in-the-money (ITM), at-the-money (ATM), or out-of-the-money (OTM).

Tip : If you want to buy calls, do not buy deep ITM or deep OTM call options. The bid/ask spread is too wide. Better is to buy ATM, slightly ITM or slightly OTM call

Trade Example

-Stock XYZ is trading at $28 a share.
-Buy 29 call for $0.80

Profit and Loss Diagram

Long Call Summary

Break Even Price Strike Price + Premium Paid
Unlimited because stock can go to infinity, at least in theory
Maximum Profit Scenario Stock rises meteorically beyond the break even price
Limited to initial premium paid
Maximum Loss Scenario Stock stays lower than break even price
Why Trade If you want to get leveraged bullish exposure to a stock at lower investment as compared to owning the stock outright
When to Trade Stock Assumption : Very Bullish
Volatility : When volatility is low, so you pay less premium to enter the trade
When to Close There is no set profit target.
Legs 1 leg
Passage of time Negative.
With passage of time, the value of this option decreases
Increase in volatility Positive.
With increase in volatility, the value of option increases
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