 Welcome. In this lesson I want to teach you about long calls and so this is a very simple strategy where you're essentially just buying a call on the underlying position on the underlying symbol. Your market assumption is bullish so you hope the stock goes up. You want to do this when implied volatility is low because an expansion in implied volatility will help your position. Optimal time frame is always 30 to 60 days to expiration. Profit target 25 to 50 percent of what you pay for that call of the debit paid. Your downside risk is defined so you know exactly what your risk is on the position when you put it on and of course no upside risk as if the underlying symbol moves up you're going to be in the profit and that upside is not defined either. So there's unlimited upside potential theoretically. Now keep in mind nothing is going to go up exponentially you know infinitely so that's why we manage these trades at a percentage of debit paid because we want to bank that profit and then be done with the trade and these have a probability of profit under 50 percent which I'll show on the platform here in just a minute. So the trade setup is simple you're simply going to buy one in the money call. I would very strongly recommend staying away from buying out of the money calls and the reason is as I note down below time decay or theta negatively impacts this position and even more so on out of the money calls. We want to buy in the money calls kind of in that 80 to 90 delta range because that's going to minimize that theta decay component on the trade meaning it's going to act more like buying stock and it's not going to have that time decay working against us as much very very minimal amount. So let's go to the platform and take a look. One thing I do want to mention too is you know think about in a stock index. So these are things that I don't typically buy by a straight long call in and the reason is because if you if you buy a call in SPY for example you want that to go up. The problem is when the market goes up almost always implied volatility goes down. So you so you've got it's got to make a pretty significant move up for you to profit because that implied volatility decay or in time decay is working against you. So I typically look if I'm gonna buy a call and something which I which I very rarely do to begin with but if you're going to do it I like to do it in a commodity. You know for example in gold or oil or soybeans or wheat or something like that because a lot of times not always but more often than a stock when you buy a call a nose and that underlying symbol goes up you also get an expansion in implied volatility. So both of those are working in your favor. So let's take a look at an example in GLD. So gold had a nice run up and now it's kind of pulled back and in my assumption and this is just purely my assumption and that is that we could have it's kind of had its pull back and it may reverse and kind of continue to the upside and so this would be a candidate that I would look to potentially buy a call in. You can do a vertical you can do other strategies as well that will work well on GLD but this would be a candidate that you could also buy a call on. So let's go to the trade tab and go to that 45 44 days to expiration and then we want to like I said you want to buy a deep in the money call. So the call side is over here. So if you look at the Delta here you've got 80 84 87 90. So somewhere in this range would be the one that I would buy. So let's just kind of go in the middle and let's say the 84 Delta. Those are trading at 555 565. So probably somewhere around $5.60 is where we would get filled on that. So if you just right click on that by single that's gonna populate down here as you can see like I said right between 565 65. So let's kick that down see if we get filled at mid price and before we do that let's analyze the trade. Got a position on in GLD already so I'll click off that just to show this one. So so here's what you're here's what you're looking at. So you've got here's where here's where price is and as you as you can see the difference between the green line which is your expiration the teal line which is expiration and the and the purple line which is which is today there's there's not a whole lot of difference between those two at your entry right. So meaning meaning the theta decay or the time decay is very minimal as far as working against you. So if this price just stayed right here you know between now and expiration theoretically you could lose $55 let me hover it over and you can see again fifty fifty seven dollars something like that and and obviously the max you can lose is that debit you paid five sixty so five hundred sixty dollars. Okay now just to give you an idea of you know sometimes it's tempting to say well why would I pay five sixty for this when I could when I could do one of these cheaper options and do something out of the money like the 120 and only pay 56 cents or 57 cents well let's let's look at that on the analyze tab and if you if you change this from 110 to 120 and look at that out of the money call make sure you unlock your little box here now this is what the the risk profile graph will look like okay now look at the difference if price stays where it is or trades all the way up to that 120 mark in GLD but nothing above that you're gonna lose the full fifty nine dollars paying fifty nine cents for this so it's fifty nine dollars so you it has to trade all the way up past 120 and a half dollars at expiration for you to make money now obviously if it does that quicker you can make money but the probabilities are working against you so if we move this hash mark to the break even at expiration you only have a 15 and a half percent chance of making money on that trade if you buy an out of the money call okay and so that's the reason why you buy these in the money calls the probabilities are much higher for you and so if you move that hash mark back to where prices today are actually to the break even point so now you've got it over a 45 percent chance and you don't have that time decay that fated decay working against you so still under a 50 50 probability on this trade but again if you can get a quick move to the upside bank a quick profit and again we're trying to manage this take this off at 25 to 50% of the debit paid so if the total risk or debit paid is 560 we're gonna take this off when we have a profit of somewhere around 50% would be would be 250 so all it has to do is move about a dollar and a half or a dollar and three-quarters for us to bank that profit at 50% and and even less if we if we bank at 25% of max profit you know all it's got to do is move about a dollar in our favor so that's how you that's how you trade a long call I'm not gonna fill that right now because I already have a long position on in GLD but just like we teach in in all the other fills you simply right-click confirm and send send that order and and get it filled hope that was helpful see you in the next lesson