Long Call
Buy a call option to profit from a stock going up. The most basic bullish options strategy explained with examples.
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What is a Long Call?
A long call is the simplest bullish options trade you can make. You buy a call option, which gives you the right to purchase 100 shares of a stock at a specific price (the strike) before a certain date (expiration). If the stock goes up, your call goes up in value. If the stock goes down or stays flat, the most you can lose is what you paid for the option.
This is the first strategy most traders learn, and for good reason. It gives you leveraged upside exposure to a stock without needing to buy 100 shares outright.
How to Set It Up
- Buy 1 call option at your chosen strike price and expiration
- Strike selection: If you want higher probability, go slightly in-the-money (ITM). If you want more leverage and cheaper cost, go out-of-the-money (OTM). At-the-money (ATM) is a solid middle ground.
- Expiration: Give yourself enough time. At least 30-60 days out is a good starting point. Shorter expirations are cheaper but theta decay eats you alive. Longer expirations cost more but give the trade room to work.
One contract controls 100 shares. You pay a premium upfront and that is the total amount at risk.
When to Use This Strategy
Use a long call when you are bullish on a stock and expect it to move up within a specific timeframe. This works best when:
- You have a strong directional opinion
- Implied volatility is relatively low (cheaper premiums)
- You want leveraged exposure without buying shares
- You have a catalyst in mind — earnings, product launch, breakout setup
Avoid long calls in high-IV environments because you are overpaying for the option. Also avoid them when you have no real time expectation for the move.
Example Trade
Stock XYZ is trading at $100. You think it will go to $110 in the next 45 days.
- Buy 1 XYZ $100 call expiring in 45 days for $4.00
- Total cost: $4.00 x 100 = $400
- Breakeven at expiration: $100 + $4 = $104
If XYZ goes to $110 at expiration, your call is worth $10. That is a $1,000 value minus the $400 you paid = $600 profit (150% return).
If XYZ stays at $100 or drops, the call expires worthless and you lose your $400. That is it. No more.
Risk and Reward
- Max profit: Unlimited. The higher the stock goes, the more the call is worth.
- Max loss: The premium you paid. In our example, $400. This is defined the moment you enter the trade.
- Breakeven: Strike price plus the premium paid. You need the stock to get above $104 at expiration just to break even.
The risk-reward looks great on paper, but remember that most OTM calls expire worthless. The probability of profit on a long call is typically below 50%. You need to be right on direction AND timing.
Tips and Common Mistakes
- Do not buy weekly options as a beginner. The time decay is brutal. Stick with 30-60 day expirations minimum.
- Do not hold to expiration hoping for a miracle. If the trade goes against you, cut your losses early. A 50% loss on the premium is often a good stop-loss level.
- Watch implied volatility. If IV is high (like before earnings), you are paying extra. The stock might move in your direction but IV crush can still kill your trade.
- Size your position properly. Never risk more than 2-5% of your account on a single long call. These are leveraged bets and losses happen fast.
Related Strategies
- Bull Call Spread — reduces your cost by selling a higher strike call, but caps your upside
- Long Put — the bearish version of the same idea
- Cash-Secured Put — another bullish approach, but you collect premium instead of paying it
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