Long Call
You buy (long) a Call
Positions in Chart: 1 lot of 26000 CE. Spot price: 25800
Setup
Buy ATM Call option
When to Use
- Speculate on a large, volatile price increase
Market Outlook
Risk & Reward
Strategy Details
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 NIFTY is trading at ₹25,800. You forecast a large, fast increase in NIFTY price and you also forecast an increase in NIFTY volatility. You buy a ₹26,000 Call for ₹50 to express this view. Your breakeven NIFTY price at expiry is ₹26,000 (strike price) + ₹50 (premium paid) = ₹26,050, 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 NIFTY prices as the market value of your ₹26,000 Call changes
Example
If NIFTY is at ₹25,800, set up: Buy ATM Call option.
This information is for educational purposes only and should not be considered as financial advice. Always consult with a qualified financial advisor before making investment decisions. Data is constructed and is not actual. Calculations may have errors.
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