What is a call option?
You might have heard about option contracts in the past. There are calls and puts. When you’re buying a call, it means you’re looking for the stock to go to the upside, which is a bullish outlook.
You can also sell a call, which means you’re looking for the stock to go down. You don’t need to own inventory or anything like that in order to sell or buy calls.
When you buy a call option contract, you’re playing against time. That’s why many people lose so much money when it comes to options.
When buying a call, you have unlimited profit potential because you’re looking for an upside move. That’s a lot of times why people buy call contracts, however, this is not always the most profitable thing to do, simply because you need that stock to move.
If the stock price stands still, you lose money. If it goes down, you lose money too. The only time that you make money is if it goes up and in your favor quite a bit. And that’s one of the tough things about buying call contracts.
In this video, I’m going to show you the risk profile picture of buying a call. This shows you where your profit and loss ultimately is when you buy a call. Also, we’re going to look at how to buy a call option contract on a trading platform. You’ll take a look at what it looks like when you buy a call option contract, how it works, and how you can make money with it.
Posted at: http://tradersfly.com/2017/12/buying-a-call-option/
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