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11.36Long Call

1What is it?

Buy a call option.

2Why does it exist?

When it is used: You expect a strong rise before expiry and want limited downside.

3Diagram
₹025,000BE 25,200ProfitLoss
Max profit
Unlimited
Max loss
₹13,000
Breakeven
₹25,200
Profit/loss at expiry for one lot (illustrative premiums). Green = profit zone, red = loss zone.
4Calculation
  1. Buy 25,000 CE at 200.
  2. Expiry 25,600 → (600 − 200) × 65 = +₹26,000.
  3. Expiry 24,900 → option worthless → −₹13,000.
  4. Maximum profit: Unlimited (rises with the index)
  5. Maximum loss: Premium: 200 × 65 = ₹13,000
  6. Breakeven: Strike + premium = 25,200
5Risks
  • Limited-risk position: the most you can lose is known in advance.
  • Premiums shown are hypothetical; real premiums depend on volatility and time to expiry.
6Quick revision
  • Max profit: Unlimited (rises with the index)
  • Max loss: Premium: 200 × 65 = ₹13,000
  • Breakeven: Strike + premium = 25,200
7Knowledge check
Q1. Breakeven of a 24,800 call bought at 150?Show answer

24,950.

Q2. Max loss?Show answer

The premium.

Q3. What must happen to profit?Show answer

Index must rise above breakeven before/at expiry.

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More in Level 11: Advanced Trading: Futures and Options (F&O)