Options Made Easy: Your Guide to Profitable Trading, Second Edition

Risk Profile Charts for Call Options

Now that you know what makes up the valuation of an option, let’s look at the risk profile of a call option.

We already know that a call option is the right to buy an asset. Logically, this suggests that the call option risk profile direction will be similar to that of buying the asset itself. So let’s have a look at an example:

Chart 1.3. Long Call option risk profile.

Look back to Example 1.2 where you buy a call option:

Stock price	$56.00
Call premium	$7.33
Exercise Price	$50
Time till expiration	2 months

Remember that. . .

Buying Gives You the Right

• Buying a call option gives you the right, not the obligation, ...