By buying call options you have the right, but not the obligation,
to purchase an underlying security. The options can be available in various
strike and expiration dates can vary from one month out to more than a year.
The one who is buying calls believes that the market will rise. If you buy
a call option, your maximum risk is the money paid for the option. The maximum
profit depends on the rise in the price of the underlying security.
As the price rises, the long call becomes
more valuable because it gives you the right to buy at the lower strike
price. That's why traders choose to buy a call option in a rising or bull
market.
When you have call you have three options to exit
the trade:
