Long Call & Long Put
The fundamental options strategies: Profit from price movements with limited risk.
Buying Options: The Basics
When you buy an option (Long position), you acquire the right, but not the obligation, to trade an underlying asset at a fixed price. Long Calls and Long Puts are the simplest options strategies and the perfect entry into options trading.
Long Call
BullishA Long Call gives you the right to BUY the underlying asset at the strike price.
When to use?
Use a Long Call when you expect the price of the underlying asset to rise.
Example: Long Call on Apple
Scenarios at Expiration:
Long Put
BearishA Long Put gives you the right to SELL the underlying asset at the strike price.
When to use?
Use a Long Put when you expect the price of the underlying asset to fall.
Example: Long Put on Tesla
Scenarios at Expiration:
Long Call vs. Long Put Comparison
| Feature | Long Call | Long Put |
|---|---|---|
| Market Outlook | Bullish (rising) | Bearish (falling) |
| Right | Buy at strike | Sell at strike |
| Max Profit | Unlimited | Strike - Premium |
| Max Loss | Premium paid | Premium paid |
| Break-Even | Strike + Premium | Strike - Premium |
| Delta | Positive (0 to +1) | Negative (0 to -1) |
| Theta | Negative (time decay) | Negative (time decay) |
Understanding Moneyness
Moneyness describes the relationship between the current price and the strike price.
In-the-Money (ITM)
Option has intrinsic value
At-the-Money (ATM)
Price near strike
Out-of-the-Money (OTM)
Option has only time value
Important Greeks for Long Options
Measures price change of option per $1 move in underlying
ITM options have higher delta, OTM lower
Time decay per day - works AGAINST long positions
Closer to expiration means faster decay
Sensitivity to volatility changes
Rising volatility increases your long option value
Rate of change of Delta
ATM options have highest gamma
When to Use Long Options?
Long Call
- You expect a price increase
- You want to profit from bullish market movement
- You want to invest with leverage
- You want to limit your risk to the premium
- As an alternative to buying stock directly
Long Put
- You expect a price decline
- To hedge a stock portfolio
- You want to profit from falling prices
- As an alternative to short selling
- During increased uncertainty or volatility
Tips for Beginners
Start small
Trade with 1-2 contracts first until you understand the mechanics.
Understand your risks
You can lose 100% of your invested premium.
Choose the right expiration
30-60 days gives the position time to develop.
Watch for liquidity
Only trade options with tight bid-ask spreads.
Have an exit plan
Decide in advance when to take profits or cut losses.
Avoid earnings
Options before quarterly reports are often overpriced (IV crush).
Ready for the Next Step?
Learn more advanced strategies like Cash-Secured Puts and Spreads.