Options Basics

Long Call Option Explained

A long call is a bullish options strategy. Buying a call option is a levered, risk-defined, cost-effective alternative to buying shares of stock.
Long Call Option Explained
Kirk Du Plessis
Apr 19, 2021

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.

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Short Call Option Explained
A short call is a bearish options strategy with undefined risk. Selling a call option is an alternative to selling shares of stock, and the seller receives payment when the option is sold.

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