Option Strategies
Module Units
- 1. Introduction
- 2. Why Trade Options?
- 3. Option Chain
- 4. Option Strategies
- 5. Options Buying Vs Option Selling
- 6. Long Call
- 7. Short Call
- 8. Long Put
- 9. Short Put
- 10. Long Call Vs Short Put
- 11. Long Put Vs Short Call
- 12. Bull Spread Strategy
- 13. Bear Spread Strategy
- 14. Call Ratio Back Spread Strategy
- 15. Put Ratio Back Spread Strategy
- 16. Hedging Strategy - Covered Call
- 17. Hedging Strategy – Protective Put
- 18. Collar Strategy
- 19. Straddle
- 20. Strangle
- 21. Strip Strategy
- 22. Strap Strategy
- 23. Butterfly Strategy
- 24. Modified Butterfly Strategy
- 25. Long Condor Strategy
- 26. Conclusion
Long Call
As we have discussed earlier there are four types of Naked Option Strategies.
- Long Call
- Short Call
- Long Put
- Short Put
Firstly, let us start with ‘Long Call’.
A Long call is one of the most basic option strategies. It involves the purchase of a call option. It is a bullish strategy.
If the stock rises, you have unlimited profit potential with limited risk.
A premium of long call increases in value from a rise in the underlying stock and volatility expansion.
The premium of a Call declines in value from a decline in the underlying stock, time decay, and volatility contraction.
Below is the illustration of the payoff diagram of a Long Call Option
The key to becoming a successful option trader is to select the best strike price and time frame to match your risk profile and goals.
The higher the strike price of a call, the premiums are lower. And lower the delta, the greater is the leverage. At-the-money (ATM) and Out-of-the-money (OTM) options seem lucrative for option buyers.
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