Option Chain Strategy - Long CALL explained with example

Strategy	Market View	Strategy Level	Risk	Reward	Leg
Long Call	Bullish	Beginners	Limited	Unlimited	1

Introduction

Buying “Call Option” is the most basic & simplest strategy. It is recommended when your outlook on the underlying asset is positive & you expect the underlying asset price to rise.

Payoff Graph - Long CALL

When to execute?

When you expect a rise in the underlying asset price

Trade

• Buy 1 lot ATM Call

Maximum profit

Maximum reward remains uncapped in Long CALL.

Maximum Loss

Since it’s a net debit trade you pay for buying the call option upfront i.e. Premium. Your maximum risk is capped

Advantages

• Unlimited profit potential with capped risk
• Possibility of greater leverage than owing the stock.

Disadvantages

• 100% potential loss of premium in case of inappropriate strike, choice of stock, time decay
• Greater leverage could prove detrimental in case the expected outlook fails