Why trade it?

Jul 9 18:23

Call options' prices are likely to rise if its underlying stock goes up

Generally, a call option and its underlying stock move in the same direction. So if you're bullish on the stock, you may consider buying its calls.

Speculation

Options can provide leverage. This means if the underlying stock moves upward, the rise in its call price could be bigger; similarly, if the underlying stock goes down, the fall in its call price could be greater, too. So calls can be used for speculation.

Limited loss but unlimited profit

The maximum potential loss for buying a call is the premium paid. But theoretically, the potential profit could be unlimited because there's no limit on how high the underlying stock price could go.

This presentation is for informational and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. Investment information provided in this content is general in nature, strictly for illustrative purposes, and may not be appropriate for all investors. Read more

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Why trade it?

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