Long Call Strategy

Jyoti Bansal (NCFM,NISM Certified Technical Analyst & Investment Adviser )
A free video tutorial from Jyoti Bansal (NCFM,NISM Certified Technical Analyst & Investment Adviser )
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Options Trading MasterClass: Options With Technical Analysis

Options Trading+++Strategies , Options Basics & Greeks (A 3-Course Bundle) For Stock & Day Trading By Technical Analysis

07:48:48 of on-demand video • Updated November 2020

  • Learn to make money by trading in Options with Technical Analysis
  • Learn the Basics of Options
  • Learn the Benefits of Trading Options
  • Understand the calculations for different Options Strategies
  • Understand and learn trade set up conditions for different options strategies
  • Understand and Learn to apply the Basic to Advanced Options Strategies
  • learn to create your own optimum Strategies according to risk profile
  • Learn how to make Options Spreads and know the Right time to execute them
English Hello everyone and welcome to our first option strategy Our first option strategy is long call that is a bullish strategy Strategy should be used in an established uptrend This is one of the most simple and basic strategies of options If we expect that the price of the underlying stock will go up beyond a certain price before expiry Purchase a call option in this way strategy appeals in low initial investment and the leverage financial reward We are purchasing a call option instead of buying shares Within purchase long calls using chart When the stock is in an uptrend And it starts rising after touching its trendline The maximum profit is unlimited as the stock price Rises And maximum loss is limited to the net premium paid For the execution of our strategy we will draw a trendline of the stock on daily chart For this Will join the first two initial point With the trend line And then extend it this is a daily chart this is a chart of Apple Incorporation Now Prices are moving in a down trend This Is the End of the Downton and stop starts Rising So we will join initial two points these are the two points from where The prices are in uptrend we will take a trendline and will join the First two points and extend the trend line Now whenever price starts Rising After crossing down this trendline or after touching the trendline We can buy a call option These are the points on this trend line where we could have purchased a call option This was the point then This was the point Again This was the point And here And here These are the points where we could have purchased a call option And if we see on RSI At this point RSI should be above the 50 level You can see here RSI is above 50 also here RSI is above 50 here also RSI is above 50 so We will purchase a call option only when RSI is above 50 level Then we will set the chart to early time frame This is the early chart and let me zoom in the chart This was a trend line Suppose this was are point Where we could have Purchase a call option this is the point 161 dollar So we will mark it This was the point we Will mark it Now we will join The two initial points And draw a trendline for this short term trend we will join the two initial point These are the points this is a first point This is a second point Extend the trendline This was the first point and this was the second point This way Now as long as the prices are above this trendline we can hold our Call option position and When prices are Falling down this trend line Will exit from our call option Now the price of the intrinsic value of the call option here is 173 dollar this is level $173 We will buy a call option at 161 An exit from it At 173 dollar Let's make some calculations now Suppose our buying price of call option At current maximum price 161 dollar is $2 And if the lot size is 100 the cost of trade will be 2 * 200 equal to $200 So the maximum profit is 173 - 161 that is 12 into 100 because the lot size 100 The maximum profit will be 1200 - 200 equal $1000 Because our cost of trade will be $200 And maximum loss is net premium paid that is $200 If the stocks Stays at Below 161 dollar On expiry $200 is the maximum you could lose but if the stock Rises to 173 dollar as in this case Before or at expiry Resulting a profit of thousand dollar If you buy the 100 shares of Apple at $161 You will require 161 into hundred equal to 16100 dollar But now you make a Thousand dollar profit on your investment of $200 only Which is an extraordinary return in percentage terms Compare to small investment Now here also the stock start rising after touching this trendlines so we could have purchase a call option here And we will draw a trendline this is the early time frame so we will Join the initial two points This is a trend line As long as the prices are About this trend line we can hold our call option And we will exit from it When prices will fall down this trendline Will take one more example this is a chart of Facebook Incorporation This is the daily chart And We can see the stock is moving in a range here Now the range Breaks here this is a breakdown So we will Draw a trendline for this a uptrend Will join initial two points these are the two point And we will join this two points and extend the trend line this is a trend lines So We can buy a call option whenever price Rises after touching this trendline or crossing down this trendline they start Rising This was the point where we could have purchased our call option This was another point This was another point Here also Could have purchased a call option Also here And here For this RSI should be above 50 level now Will set the chart on early time frame Suppose this was the point where we could Purchase a call option Now Will draw a trend line will join initial two points And extend the trendline This is a trend line So if you have purchase a call option here this is a point as 172 dollar and This was the point where we will exit from a call option this is 179 Dollars After purchasing a call option here if the stock stays at this level or It falls below this level before expiry The maximum loss is the premium paid But if adopt the strategy in an uptrend and at right place Using chart analysis Will surely make money