⚠️ Options involve significant risk and are not suitable for all investors. Before trading options, read the OCC Characteristics and Risks of Standardized Options. Educational only; not investment advice. Examples ignore commissions, taxes, and early assignment.

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Long Call

Buy a call: the right to buy 100 shares at the strike before expiration. Leveraged bullish bet with limited risk.

New to this? A call option gives you the right, but not the obligation, to buy 100 shares at a set price (the strike) before a set date (expiration). You pay a price for that right, called the premium. Unfamiliar word? See the options glossary.

Watch: Long Call Explained

Payoff at expiration

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When traders use it

You expect a meaningful rise before expiration.

Formulas (per share; ×100 per contract)

Max profit	Unlimited
Max loss	C (premium paid)
Breakeven	K + C

Key risks

Time decay erodes value; you can lose 100% of the premium; implied-volatility drops hurt.

How it works

You pay a premium for the right (not obligation) to buy 100 shares at the strike until expiration. If the stock ends above the strike, the call is worth stock price − strike. You profit only if that exceeds the premium you paid. Below the strike, the call expires worthless and you lose the premium.

Worked example HYPOTHETICAL

Hypothetical example only — not real prices or a recommendation. Stock at $100. Buy 1 call, 45 days, $100 strike, for $4.00 ($400 paid).

Stock price at expiration	P/L (1 contract, excl. fees)
$90	−$400
$100	−$400
$104	$0
$110	+$600
$120	+$1,600

Market outlook: when to use it

Use when: Bullish and expecting a meaningful move up within a defined time, with risk limited to the premium.

Avoid when: You expect slow, small gains (time decay wins), or implied volatility is very high (you overpay).

The Greeks, in plain words

Delta	Positive: gains as the stock rises; at-the-money starts near 0.50.
Theta	Negative: you lose a little value every day, faster near expiration.
Vega	Positive: higher implied volatility increases the call’s value.
Gamma	Positive: big moves accelerate your delta in your favor.

Choosing strikes and expiration

At-the-money balances cost and responsiveness; in-the-money (delta 0.70+) behaves more like stock; far out-of-the-money is cheap but usually expires worthless. Give yourself more time than you think — 60+ days reduces decay pressure.

Managing the trade

Set a profit target and stop (e.g., exit at 50% loss of premium). You can roll up to lock in gains, or convert to a bull call spread by selling a higher call. Long options are not assigned; you can exercise, but selling the option usually captures more value.

Common mistakes

Buying cheap far-OTM “lottery tickets”.
Holding through earnings and losing to IV crush.
Too-short expirations.

FAQ

Max loss?
The premium paid ($400 here).

Must I buy the shares?
No; most traders sell the call before expiration.

Explained simply

When would someone use this?

When you expect a stock to rise and want to risk a limited amount of money, rather than buying the shares outright.

The setup, in plain words

You pay a premium to buy one call. If the stock rises above the strike by more than what you paid, you profit. If it does not, the most you lose is the premium.

Max profit, max loss and breakeven

Max profit: Unlimited in theory, because the stock can keep rising.
Max loss: The premium you paid, if the stock ends at or below the strike.
Breakeven: Strike + premium paid.

A simple numeric example (hypothetical)

Stock at $100. You buy a $100 call for $3.00 ($300). At expiration: stock $110 → call worth $10, profit $700. Stock $103 → breakeven. Stock $95 → call expires worthless, loss $300.

The main risks, in plain words

Time decay: the option loses value every day if the stock does not move.
You can be right on direction but still lose if the move is too small or too late.
A drop in implied volatility can lower the option's value.

Beginner FAQ

Do I have to buy the shares?
No. Most traders sell the call before expiration to take the profit or loss.

Why is it called leverage?
For $300 you control 100 shares worth $10,000, so percentage gains and losses are much larger than owning the stock.