Long Call Options Strategy — Guide, Profit & Calculator

A long call is the most basic bullish options strategy, involving the purchase of a call option. This gives you the right to buy 100 shares at a fixed strike price until expiration, offering unlimited profit potential with defined, limited risk.

Use the interactive chart below or jump to the setup guide to understand strike selection and risk management for your bullish thesis.

Interactive Payoff Chart

When to Buy Call Options

• Outlook: Strongly bullish; expecting significant upward price movement.
• Catalysts: Earnings beats, product launches, or technical breakouts.
• Volatility: Best bought when IV is low relative to expected future volatility.
• Liquidity: Ensure tight bid-ask spreads and adequate open interest.

Setup: Strike Selection & Expiration

Strike Selection

1. At-the-money (ATM): Balanced cost and delta exposure.
2. Out-of-the-money (OTM): Lower cost but requires larger moves.
3. In-the-money (ITM): Higher cost but more intrinsic value protection.
4. Target-based: Choose strikes that align with your price target.

Expiration

• 30–90 DTE balances time value and theta decay.
• Align expiration with expected catalyst timing.

Risk Sizing

Max loss equals the premium paid. Risk only 2-5% of portfolio on any single option position due to binary nature of outcomes.

Looking for optimal strikes? Try the Long Call Calculator to compare probabilities and expected returns.

Payoff, Breakeven & Greeks

• Max Profit: Unlimited above breakeven.
• Max Loss: Premium paid (plus fees).
• Breakeven: Strike price + premium paid.

Greeks (at inception)

• Delta: Positive; increases as stock price rises.
• Theta: Negative; time decay accelerates near expiration.
• Vega: Positive; benefits from rising implied volatility.
• Gamma: Highest near ATM; increases delta sensitivity.

Management & Exits

• Profit taking: Consider selling at 50-100% gains to lock in profits.
• Stop losses: Cut losses around 50% of premium to preserve capital.
• Time-based: Avoid holding through final week unless deeply ITM.
• Rolling: Extend time or adjust strike if thesis remains intact.

Worked Example (Illustrative)

Stock at $100. Buy the $105 call for $2.50 with 60 days to expiration.

• Max profit: Unlimited above $107.50.
• Max loss: $2.50 per share ($250 per contract).
• Breakeven: $107.50 at expiration.

If stock reaches $115, option worth ~$10 (300% gain). Use the calculator to model scenarios before entering positions.

Frequently Asked Questions

Disclaimer

This page is for educational purposes only and is not investment advice. Options involve risk and are not suitable for all investors. Consider consulting a qualified professional. Examples are illustrative and exclude fees/slippage.

Sources & further reading: Cboe Options Education · OCC Investor Resources