When should I buy a long term call option?

Long-term call options are frequently used as a replacement strategy for a long stock position as it offers long term upside exposure with limited risk. Calls should be used when there is a bullish outlook on the underlying stock or ETF for at least 2-3 months or greater.

How much can you lose on long call options?

If you buy 10 call option contracts, you pay $500 and that is the maximum loss that you can incur. However, your potential profit is theoretically limitless.

Can you get rich buying call options?

The answer, unequivocally, is yes, you can get rich trading options. Since an option contract represents 100 shares of the underlying stock, you can profit from controlling a lot more shares of your favorite growth stock than you would if you were to purchase individual shares with the same amount of cash.

How do you maximize a call option?

To maximize your leverage and control your risk, you should have an idea of what type of move you expect from the commodity or futures market. The more conservative approach is usually to buy in-the-money options. A more aggressive approach is to buy multiple contracts of out-of-the-money options.

Can you lose more than you invest on a call option?

Here’s the catch: You can lose more money than you invested in a relatively short period of time when trading options. With options, depending on the type of trade, it’s possible to lose your initial investment — plus infinitely more. That’s why it’s so important to proceed with caution.

Is option buying profitable?

Since futures & options have to be traded in lots (lot size of Tata Motors is 1,500 shares), your total cost to buy one lot of 200 call options of Tata Motors would be Rs7,350 (Rs1,500*Rs4. 90). Effectively, you have made a profit of Rs15,150 on an investment of Rs7,350, which is an unbelievable ROI of 206\%.