What is the max loss of a Long Call?

The max loss is Cost of the Call.

When do I breakeven when utilizing a Long Call strategy?

The breakeven is defined as Strike Price plus Premium (debit) paid.

What is the typical application of a Long Call?

The typical applicatio is: 1. Speculate on a large, volatile price increase.

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Beginner

Long Call Long Put Cash Secured Put Covered Call Covered Put Protective Call Protective Put Long Strangle

Intermediate

Long Straddle Call Credit Spread Call Debit Spread Collar Put Credit Spread Put Debit Spread Long Call Broken-Wing Butterfly Long Call Butterfly Short Iron Butterfly Short Iron Condor Long Put Butterfly Bearish Broken-Wing Butterfly

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Advanced ** Risk of Ruin

Short Call Short Put Short Straddle Short Strangle Bearish Risk Reversal Call Frontspread Put Frontspread Risk Reversal Synthetic Short Synthetic Long

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Option Strategies Details

Setup

Buy a Call

Typical Application

1. Speculate on a large, volatile price increase

Volatility forecast

Price forecast

Breakeven

Strike Price plus Premium (debit) paid

PnL Equivalent

Protective Put

Max contract loss

Cost of the Call

Max position loss

same as Max Contract Loss

Long Call

Level: Beginner

1 Leg

Debit

Beginner

You buy (long) a Call

Description

A trader who wants to speculate on a large, fast, and volatile price increase can buy a Call. The trader pays a debit, called a premium, to buy the Call and has the right (but not the obligation) to buy 100 shares at the strike price.

Suppose stock XYZ is trading at $24. You forecast a large, fast increase in XYZ price and you also forecast an increase in XYZ volatility.

You buy a $25 Call for $0.50 to express this view. Your breakeven XYZ price at expiry is $25 (strike price) + $0.50 (premium paid) = $25.50, but since the time component of your trade plan may not extend all the way to expiration you should be prepared to sell to close at a variety of XYZ prices as the market value of your $25 Call changes.