Options StockTrading : STRATEGIES : BUY CALL

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OPTIONS STRATEGY GUIDE

Strategy - BUY CALL (details below)

bullish
- very bullish
- moderately bullish + certain that the market will not fall
- moderately bullish + fairly certain that the market will not fall
- bearish in immediate near-term (weeks) + bullish in longer term (months)
bearish
neutral
volatile

BUY CALL

Strategy View
Investor thinks that the market will rise significantly in the short-term. .

Strategy Implementation
Call options are bought with a strike price of a. The more bullish the investor is, the higher the strike price should be.

Upside Potential
Profit potential is unlimited and rises as the market rises.

Breakeven Point at Expiry
Strike price plus premium.

Downside Risk
Limited to the premium paid - incurred if the market at expiry is at, or below, the strike a.

Margin
Not required

Comment
If the market does little then the value of the position will decrease as the option time value falls.

This guide comes from the - NumaWeb - The Internet Resource Center For Derivatives http://www.numa.com/

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