Protective call option strategy refers to buying call options for protection when the underlying futures contract is sold and the underlying price rises. Especially when traders hold short positions in basic futures contracts, they are worried about the losses caused by the rise in basic prices. Therefore, at this time, the trader's mentality is that he hopes to still get the benefits of the decline in the underlying price, and at the same time try to avoid the risk of the rising of the underlying assets. At this time, it is a good choice to adopt protective call option strategy. In essence, short contracts based on buying call options provide insurance functions. When the underlying asset price rises sharply, short futures contracts will suffer losses, while call options will completely offset the futures losses. When the price of the underlying asset falls sharply, the short futures contract will make a lot of money, and the call option will be abandoned when it expires. The net income of the whole strategy portfolio is equal to the profit of futures contracts minus the premium paid by buying call options. Then, simply calculate the profit and loss of each part of this strategy combination:

Futures profit and loss = the price of selling futures contracts-the latest price of futures contracts.

Option exercise profit and loss = the latest price of futures contract-exercise price

Net income = futures profit and loss+option exercise profit and loss-commission payment = selling futures contract price-execution price-commission payment.

Obviously, the net income when the option is exercised is the maximum loss. L = the price of selling futures contracts-the exercise price-the expenditure of royalties.

Break-even point = the price of selling futures contracts-the expenditure of royalties.

Under normal circumstances, choose to close the position or empty the position option for insurance. If the expected increase is large, you can choose the deep imaginary call option, which can reduce the expenditure of royalties. If you want to protect short futures contracts to the greatest extent, you can choose equal call options. The capital occupation is mainly the margin of selling futures contracts and the premium of buying call options, and the capital occupation may be more.