Buying call option is one of the basic option strategies and the mainstay of many strategies. It means that investors choose a certain exercise price and pay the corresponding premium, so as to obtain the right to buy the corresponding target of call option from the seller at the exercise price (some commodity options and equity options are delivered in cash). Profit model If the price of the subject matter rises, the option buyer can exercise or close the position and get the proceeds from the price increase.

For the call option buyer, theoretically, when the market price rises, the potential profit is infinite; When the market price falls, the risk is limited, and the biggest loss is the patent fee paid.

Without considering the transaction cost, the breakeven point at the expiration of the option is equal to the exercise price plus the premium paid by the buyer when buying the option, that is, breakeven point = exercise price+premium paid. When the option expires, the more the market price is higher than the breakeven point, the more profits the option buyer will make.

Benefits of buying call options

Have rights but no obligations. To buy a call option, you can get the right to buy the underlying asset at a fixed price (or give it up) only by paying the corresponding royalty, without other obligations; So the loss is locked, that is, your commission, and the income depends on the increase of the target price, which is theoretically infinite.

Lever amplification. Buying call options is different from buying futures. First, there is no need to pay a deposit. Second, you only need to pay a premium (the number of lots is lower than the futures price), which increases the leverage and retains the opportunity to gain income.