Buy a call

What are the basics？

Like stocks, options are financial securities that can be bought and sold. There are two types of options: calls and puts.

Buy a call means you need to pay an amount (the premium) for a contract that gives you the right, not the obligation, to buy an asset (the underlying asset) at an agreed price (the strike price) on or before a specified date (the expiration date).

For example, you may purchase a $1,000 TUTU 202X-XX-XX call at $100 premium. In this case, you have the right to buy 100 shares of TUTU at $1,000 per share on or before 202X-XX-XX.

Why trade it?

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.

Options trading entails significant risk and is not appropriate for all customers. It is important that investors read Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Opening new options positions close to or on their expiration date comes with substantial risk of losses for reasons that include potential volatility of the underlying security and limited time to expiration. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount. Supporting documentation for any claims, if applicable, will be furnished upon request.

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. It is provided without respect to individual investors’ financial sophistication, financial situation, investment objectives, investing time horizon, or risk tolerance. You should consider the appropriateness of this information having regard to your relevant personal circumstances before making any investment decisions. Past investment performance does not indicate or guarantee future success. Returns will vary, and all investments carry risks, including loss of principal. Moomoo makes no representation or warranty as to its adequacy, completeness, accuracy or timeliness for any particular purpose of the above content.

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