Long Call
Buying a call for the right—but not the obligation—to buy the underlying at the strike price during the contract term.
What is a Long Call?
Buying a call for the right—but not the obligation—to buy the underlying at the strike price during the contract term.
Construction
Buy one call option. A standard equity option commonly represents 100 shares, but contract specifications must be confirmed.
When it may be studied
To study leveraged bullish exposure with a defined premium at risk. The buyer must overcome the premium and time decay.
Expiration profile
Maximum risk: Premium paid
Maximum reward: Theoretically unlimited
Break-even: Strike price plus premium paid at expiration
Worked example
A 100-strike call purchased for $3 costs $300 per standard contract. At expiration, the simplified break-even is $103. Below $100, the option expires with no intrinsic value.
Key risks and limitations
The entire premium can be lost. Direction alone is not enough: timing, implied volatility, liquidity, and expiration all matter.
Entry and exit checklist
- Confirm contract multiplier, expiration, exercise style, settlement, and liquidity.
- Calculate the maximum loss under the intended structure.
- Review earnings, dividends, corporate actions, and other event risks.
- Define an exit, adjustment, or expiration plan before entry.
- Understand what happens if one leg is assigned or exercised early.