This is a 6 episode Masterclass explaining the Long Call Strategy using the AAPL $240 Call as an example.

We're breaking down the a bullish strategy that gives you massive leverage: the Long Call. If you're betting on a stock going up, this strategy limits your downside while maximizing your potential return.

A brief reminder of What is a Call Option?

A call option is simply a contract that gives you the Right, but not the Obligation, to buy 100 shares of a stock at a fixed price, at or before a specific date. You are the buyer, or the "Long."

You pay a small, non-refundable cost called the premium for this right. If the stock rises, the right is valuable. If the stock falls, you simply lose the premium and walk away.

Key Terminology

Let's clarify the key terms for every contract:

The Trade Setup & Example

Let's set up a trade with AAPL. Today (Oct 17th 2025) AAPL is trading at $252.40.

You've secured exposure to 100 shares for just $2,215.

The long call is a bullish strategy that lets you profit from a stock's rise without the full cost of buying shares. It's a way to participate in potential upside at a fraction of the price.

The long call strategy is constructed by buying a call option. An investor with this position can be said to be ‘Long’ a call.

A long call strategy will always be established at a net debit. In other words, it costs you money to buy a Long Call.

The long call strategy is a very bullish position. We want the share price of AAPL to rise substantially between now and the expiration date (Jan 2026 in our example).

The maximum upside profit for a long call strategy is said to be ‘unlimited’. The further the share price of the stock rises above the break-even price, the more valuable the call option becomes. We therefore cannot define exactly the maximum profit when we buy a call option.

Profit = (Value of Call Option minus cost of Call Option) multiplied by (number of contracts purchased multiplied by 100)

In the AAPL example, if the value of the $240 call rises to $60 (the stock price would need to rise to circa $300 for that to happen). Our profit will be:

= ($60 - $22.15) * 1 * 100

= $37.85*100

=$3,785

The max profit profile for the long call is similar to buying the stock, both are said to have unlimited profit potential. But comparing the profit potential if AAPL gets to $300, you will see that buying the stock is better.
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Return on investment is calculated as follows: (Profit divided Cost of the Call Option) multiplied by 100. In our AAPL example, return on investment is:

= ($3,785/$2,215) * 100

= 170.88%

If we invested in the stock at $252.40, the profit would be $4,760. Why shouldn’t we just do that? We would have made more profit, right?

The answer is yes, we would have made more profit but we also would have had to use a lot more capital and risk to make that profit. Remember to buy 100 shares of stock it would have cost us $25,240. Therefore, our return on investment if we invested in the stock would have been:

= ($4,760/$25,240) * 100

= 18.86%

As you can see from the above you have risked a lot less with the long call to make the profit, that is why the return on investment is so high.

The maximum downside loss for a long call strategy is ‘limited’ entirely to the net debit initially paid for it. This loss will be seen if AAPL closes at or below the $240 strike price of the long call at expiration, no matter how low the Facebook declines.

Maximum loss in our AAPL example = $22.15 debit paid, or $2,215 total

Again, comparing the AAPL long $240 call strategy to simply buying the stock at $252.40, you will see that there is a lot more at risk if we buy the stock. It is unlikely that AAPL shares will go to zero, but the risk of buying 100 shares of AAPL is technically $25,240.

Buying the call option limits your potential losses when the stock price drops significantly compared to directly purchasing the stock.

The break-even price for a long call strategy at expiration is a closing Facebook stock price equal to the strike price of the long $120 call plus the $5.45 debit paid for the spread.

At expiration, the break-even price for the AAPL $240 long call would be equal to $240 (strike price) + $22.15 (net debit paid) = $262.15 In other words, the share price of AAPL would need to be over $262.15 at expiry for us to start making a profit.

This is one of the downsides of this strategy when you compare it to buying the stock. At EXPIRY, we need AAPL shares to move up $10 from the current price of $252.40 to make a profit with the AAPL long $240 call. Whereas, with the stock the breakeven price is the price you paid for the stock.

There is a way to reduce the breakeven price for the long call which we will discuss in greater detail later. But it involves buying in-the-money calls. They are more expensive but they will reduce the breakeven price. This is a trade-off that you will need to consider and will depend on how bullish you are on the stock.

One of the major drawbacks of the long call strategy is the probability of profit before expiration. The long call strategy will have a probability of profit that will be lower than 50%. In fact, the further out-the-money the call option you purchase, the less chance you have of being profitable.

In the AAPL example, the probability of profit is just 41%. The probability of profit for purchasing the stock is 50%. As you can see from this example, the chances of profit are greater when you buy the stock versus buying the AAPL $240 call option. This is a major consideration for you and it should not be underestimated.

The reason that the probability is lower on the long call in this example, is because the break-even price for the long stock is lower than the break-even price of the long call.

Please note: If the share price rises soon after purchase of the long call there is a strong possibility of the long call being profitable. The reason is that there is ‘time’ value left in the call option. Our examples above assume that we are at expiration and that no ‘time’ value exists.

But you should still be aware of the total risks in each trade.

At expiration, if AAPL closes at a price between the break-even price and the $240 strike price, a partial loss would be seen. Above the break-even point there would be a profit.

Before expiration, an investor can take a profit or cut a loss by selling the call option if it has market value which will be done at a net credit. Profit or loss would simply be the net difference between the debit initially paid for the call option and the credit received at its sale.

To master options, you must master the Greeks. Today, we're focused on Delta, your key measure for directional risk. Delta measures how much the option's premium changes for every $1 move in the stock.
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For a Long Call, it's always positive (0 to 1.00). In the AAPL $240 CALL Example: A Delta of 0.696 means that the value of the AAPL option gains $0.696 when the stock price rises by $1.

Please note: Add the delta to the (Bid price) when calculating as this is the price you would sell the call at (not the ask). For example, if AAPL rallied by $1 the value of our call option will be circa $22.40. ($21.70 Bid price + $0.696 delta ). And vice versa when it falls.

Delta as Leverage

Delta increases as the stock moves In-The-Money (ITM). This means the closer you get to a win, the faster your option's value accelerates. This is the leverage factor in action!

Delta also serves as a rough proxy for Probability of that option finishing in the money (Real Value) at expiration (NOT Probability of Profit). A 0.69 Delta means roughly a 69% chance of the AAPL $240 Call expiring ITM at expiry.

As a general rule of thumb we prefer to have Delta of close to 0.7 when buying call options.

For a long call strategy, theta is negative. As each day passes to expiry, time value is eroding from the call option. Look at the option quote for AAPL:

In options trading, time is a liability. We're tackling Theta , the relentless enemy of every Long Call buyer.

Theta measures the amount of value your option loses every single day due to time passing. It’s always negative for a Long Call.

Example: A Theta of -0.086 means you lose $8.60 per day, even if the stock is flat.

The Theta Trap

Time decay is not linear; it accelerates dramatically in the final 30-45 days before expiration. We call this the Theta Trap. To be profitable, your positive Delta gains must quickly overcome your accelerating negative Theta losses.

In another course The Bull Call Spread we use a combination of calls to offset some but not all of this Theta Risk.

Theta Decay is one of the biggest drawbacks of the long call strategy.

Gamma ($\Gamma$): The Accelerator

Gamma is the rate of change of Delta—the gas pedal. Gamma is always positive for a Long Call.

Example: If Gamma is 0.01, a $1 stock move increases your Delta by 0.01. This positive Gamma makes your profits accelerate faster the more the stock moves in your favor and vice versa.

In our AAPL example Delta is 0.696. For a $1 move up in the AAPL share price the DELTA will then move up to 0.706 (0.696 + 0.01). Likewise when the share price falls the value of Delta falls.

An increase in volatility has a positive effect however, usually when implied volatility is increasing the share price of the stock is falling. Any share price fall will be a negative for the Call Option.
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Vega measures price sensitivity to Implied Volatility (IV). As a Long Call buyer, you are Long Vega, meaning you benefit if IV increases after you buy.

A vega of 0.452 is the Dollar amount that the value of the $240 call option will change for a 1% change in implied volatility. For example if the implied volatility changed from 27.2% to 28.2%. The value of the call option will go up by $0.452 to $22.15 (Bid price of $21.70 plus the vega of 0.452).

The Volatility Crush Risk

The risk is the Volatility Crush. If you buy when IV is high (like before earnings) and IV subsequently drops, your option premium loses value due to Vega, even if the stock moves favorably.

Strategy: Aim to buy options when IV is low.

What strike price?

The strike prices that you pick will depend on how bullish you are on the stock.

Our Guidelines (But everyone is different):

Asset Allocation

You have no assignment risk with a long call strategy.

Should a stock go ex-dividend before expiry you may want to consider taking early assignment to receive the dividend for the stock. This will depend on the dividend amount.

Like any strategy, the long call has pros and cons. Compared to buying the stock outright, it offers lower risk and potentially much higher returns.

However, the long call also has drawbacks. Your breakeven price is higher (depending on the strike price you choose), making profitability less likely. Also, call options lose value over time (theta decay). If the stock price doesn't rise above your breakeven point before expiration, you could lose some or all of your investment. Finally, call options don't pay dividends, and you don't get voting rights.

At Share Navigator, we only use long calls for expirations longer than 3 months, giving the stock more time to rise. We prefer in-the-money strikes with a delta of at least 0.7, even though they cost more, as this improves the probability of profit.

The long call isn't a strategy we use often. We generally avoid paying for time premium. If we're bullish and implied volatility is low, we prefer the bull call spread (great for beginners). If we're bullish and implied volatility is high, we opt for credit strategies like the short put, put ratio spread, or bull put spread.

Time for you to apply your knowledge.

At this stage it is important for you to get some practical experience in buy call options. so here is what you need to do:

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