Long Call
Buy a call option to profit from a rise in the underlying with limited, defined risk and unlimited upside.
What is a Long Call?
A Long Call is the most basic bullish options strategy. You pay a premium today for the right — but not the obligation — to buy the underlying at a fixed strike price on or before expiry. Your entire risk is the premium paid, while your profit grows rupee-for-rupee as the underlying rises above the strike. It is the option-buyer's equivalent of going long, but with built-in downside protection and far less capital than buying the index or stock outright.
Payoff Diagram
Profit & Loss at expiry
Per share (multiply by lot size 75). Gold dots mark breakeven points; green = profit, red = loss.
Construction
- Buy 1 At-the-Money (ATM) or slightly Out-of-the-Money (OTM) Call.
- Pay the premium (debit) upfront — this is your maximum loss.
- Choose an expiry that gives your view enough time to play out.
When to Use It
Use when you are strongly bullish and expect a sharp, timely move up. Best deployed when implied volatility is low (options are cheap) and a catalyst — earnings, budget, RBI policy, breakout — is expected soon. Avoid buying calls in high-IV environments where you overpay for time value.
The Greeks
Positive Delta (gains as price rises), Positive Gamma, Positive Vega (gains if IV rises), Negative Theta (loses value daily as time decays).
Risks & Considerations
- Time decay (Theta) works against you every day the underlying stays flat.
- A fall in implied volatility can shrink the option's value even if price is unchanged.
- You can lose 100% of the premium if the underlying is at or below the strike at expiry.
Worked Example (Nifty)
Illustrative trade — lot size 75
Nifty spot is 20,000. You buy the 20,000 CE for ₹200. Cost = ₹200 × 75 = ₹15,000 (your max loss). Breakeven = 20,200. If Nifty expires at 20,500, intrinsic value = ₹500, profit = (500 − 200) × 75 = ₹22,500. If Nifty expires at or below 20,000, the option expires worthless and you lose ₹15,000.