← BeginnerLesson 19 · 6:05
Long call (strategy)
Summary
You can set up a long call step by step: write down your idea, choose an expiry, choose a strike and choose a size, then read your worst case, break-even and risk matrix. You can compare expiries and strikes with real sums and see when selling before the last day helps. You can run an entry checklist and write your exit before you buy.
Key terms
- long call
- A call you bought and hold, used when you expect a stock to rise soon and want a fixed maximum loss.
- choosing an expiry
- choosing a strike
- exit plan
- entry checklist
- long
- Having bought something and holding it, so a long call is a call you bought.
Check yourself
Answer each question to see why the right answer is right.
1. You compare a 30-day call with a strike of $100 at $345 and a 60-day one at $489. XYZ stays at $100 for 30 days. What has each lost?
2. XYZ ends at $106. How do the call with a strike of $100 ($345) and the call with a strike of $105 ($158) compare?
3. XYZ rises to $108 with 15 days left and the model values the call at $833. If you sell then rather than holding to a last day at $108, what's the difference?
4. XYZ ends at $102. Which of the four ways a long call goes wrong is this?
5. What should your written exit include before you buy?
Finished the video and the quiz? .