A long call is an options strategy where an investor buys a call option, betting that the underlying stock will increase in price. This strategy is used to generate profits from a rise in the stock price, with the potential to make unlimited profits.
A long call is an options trading strategy that involves buying a call option, which gives the buyer the right to purchase a security at a predetermined price (the strike price) on or before a certain date (the expiration date). The buyer of the call option hopes that the price of the underlying security will increase before the expiration date, allowing them to purchase the security at the strike price and then sell it at a higher price in the open market.
The long call strategy is a bullish strategy, meaning that the investor expects the price of the underlying security to increase. The investor will benefit from the increase in the price of the underlying security, as they will be able to purchase the security at the strike price and then sell it at a higher price in the open market. The investor will also benefit from any dividends paid out by the underlying security.
The investor will incur a cost when buying the call option, which is known as the premium. The premium is the price that the investor pays for the right to purchase the underlying security at the strike price. The premium is determined by the market and is based on the current price of the underlying security, the strike price, the expiration date, and the volatility of the underlying security.
The investor will also incur a risk when buying the call option. If the price of the underlying security does not increase before the expiration date, the investor will not be able to purchase the security at the strike price and will lose the premium that they paid for the call option.
The long call strategy is a popular strategy among investors who are bullish on the underlying security and expect the price to increase before the expiration date. The strategy can be used to generate income, as the investor can collect the premium when they buy the call option. The strategy can also be used to speculate on the price of the underlying security, as the investor can benefit from any increase in the price of the underlying security before the expiration date.