Long Call Option Explained
A long call option is the most basic and generally traded contract that new investors will use as they transition from stock trading. A call option is purchased when you have the expectation that the underlying stock will rise in the future. As a call option buyer you will pay a premium now for the right to purchase shares in the future at some predetermined price. This premium is then added to the share price that you have selected (your strike price) to determine your break-even point. Compared to buying the stock out-right, a call option buyer is using leverage by controlling 100 shares of stock for each 1 call option purchased.