Buy Call Option
Long Call – Buy Calls in a Bullish market with at least 45 day until expiration.
Entry Rules
Bullish expectations for the underlying asset.
Low Implied Volatility resulting in cheap options.
Exit Rules
- Close position if it falls to 60% of purchase price.
- Close position 30 days to expiration.
- Evaluate position at 100% profit.
If you are still Bullish, close 50% of position to take your money off the table.
Use these exit rules again, but adjust your ‘purchase price’ to the current price.
This assures that you don’t give back all of your profit.
Otherwise, close your entire position.
Profit & Loss Calculations
Maximum Risk – Limited to the premium paid for the Call
Maximum Profit – Unlimited as the price of the stock rises above the break even
Breakeven – Call strike price + Call option premium
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