Wednesday, September 22, 2010

LONG CALL : Options Trading Strategies


Long Call
Investor use long call when he is bullish about market. A long call is simply the purchase of one call option.
Market Scenario: Bullish
Risk: Limited
Reward: Unlimited
BEP: Call Strike + Premium
EXAMPLE:
Entry:

SPOT
5000
Strike
Premium
LONG CALL
5100
50

BEP = 5100 + 50 = 5150
On Exit if:
SPOT
CALL PAY-OFF
PREMIUM
STRATEGY PAY-OFF
4800
0
-50
-50
4900
0
-50
-50
5000
0
-50
-50
5100
0
-50
-50
5150
50
-50
0
5200
100
-50
50
5300
200
-50
150
5400
300
-50
250
5500
400
-50
350
Strategy Pay-Off

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