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Long call
A long call seeks upside participation with premium at risk and no fixed maximum profit at expiration.
Lesson · Options Trading
Long Calls and Long Puts
Plan defined-risk directional positions with long calls and long puts, compare expiration payoff with modeled pre-expiration value, and calculate premium risk and breakeven.
Synthetic educational examples
Core concepts
A long option risks its premium; what it is worth before expiration is a separate question.
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Long put
A long put seeks downside participation with premium at risk and substantial but limited maximum profit as stock approaches zero.
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Pre-expiration value
Before expiration, option value can differ materially from intrinsic value because time and IV remain.
Interactive lesson
Set the entry, then model an exit at a stock price, a date and an IV, and compare it with the expiration line.
Modeled exit before expirationExpiration P/L
Plan a long option
A direction forecast is not enough; define time, volatility, and exit conditions.
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State the directional thesis
Use a call for bullish exposure or a put for bearish exposure.
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Choose strike and expiration
Match delta, premium, and DTE to the expected move and timing.
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Set maximum premium risk
Size the position from the debit that can be lost, not from hoped-for profit.
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Define exit conditions
Specify stock invalidation, profit objective, time stop, and event exposure.
Long-option planning
Score 0 / 0Choose the best answer.
Lesson rule
Change the inputs, calculate the result, and explain the risk before selecting a contract.
Common mistakes
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Buying far OTM solely because it is cheapLow delta and limited time can require an unusually large and fast move.
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Using only expiration breakeven for a planned early exitRemaining time and IV can produce profit or loss before expiration at different stock prices.
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Risking the entire premium by defaultA position can be exited before a full premium loss when the thesis is invalidated.
Completion standard
✓
Finish when you can state a long option’s expiration breakeven and maximum loss from strike and premium, and explain why an exit before expiration is priced by time and volatility rather than by that breakeven.
The drill asks whether a position below its breakeven, weeks before expiry, is necessarily losing.
Model scope: Theoretical values use a simplified European Black–Scholes model with a fixed 4.5% annual rate and no dividend input, so a number here can be reproduced in any calculator that takes those inputs. Listed products, early exercise, dividends, spreads, fees, and market conditions can produce different prices and outcomes.