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Long Call
BullishLimited RiskUnlimited Reward
Pay a premium for the right to BUY shares at strike K. Your loss can never exceed the premium paid, but profits are unlimited as the stock climbs.
Strategy Legs
1
BUYCall Option
at Strike K
− C (premium out)
Step-by-Step Construction
- 1Choose a strike K — usually at- or slightly out-of-the-money.
- 2Buy 1 call contract and pay premium C upfront. This is your max loss.
- 3At expiry: if S > K, intrinsic value = S − K. Your net P&L = (S − K) − C.
- 4If S ≤ K the option expires worthless; you lose exactly C.
Key Metrics at Expiry
Max Profit
Unlimited (S → ∞)
Max Loss
C (premium paid)
Breakeven
K + C