Call Options Explained: How to Profit from Rising Stocks
Learn how call options work and strategies for using them to profit when you expect a stock to rise.
💡 Key Takeaways
- ✓Calls profit when stock prices rise
- ✓Maximum loss is the premium paid
- ✓ITM calls have more intrinsic value
- ✓Learn the Greeks to understand option behavior
A call option gives you the right to buy 100 shares of a stock at the strike price before expiration. You pay a premium for this right.
If the stock price rises above your strike price plus the premium paid, you profit. Your maximum loss is limited to the premium paid.
In-the-money (ITM) calls have a strike price below the current stock price. Out-of-the-money (OTM) calls have a strike above the current price.
The Greeks measure how option prices change: Delta measures price sensitivity, Theta measures time decay, Vega measures volatility sensitivity.
Common call strategies include buying calls for directional bets, selling covered calls for income, and using call spreads to reduce cost.
Summary
- 1Calls profit when stock prices rise
- 2Maximum loss is the premium paid
- 3ITM calls have more intrinsic value
- 4Learn the Greeks to understand option behavior
Disclaimer: This content is for educational purposes only and should not be considered financial advice. Always do your own research and consult with a qualified professional before making investment decisions.
