11 Minute Read

Tackle Today: Call Options

February 8, 2022

By | No Comments

Tackle Today: Call Options

«It’s all about leverage and limited liability.»

Traders,

Swing traders have three choices when building a trade.

  • First, they can purchase shares of stock.
  • Second, they can enter a directional options trade.
  • Third, they can enter a cash flow options trade. 

It is the second which commands our attention today.

For bullish trades, long calls are the logical substitute for buying stock. So here are a few key characteristics of the call option.

  • It’s a contract that usually controls 100 shares of stock.
  • It gives you the right to buy shares of stock at a set price, known as the strike price. 
  • It has an expiration date and loses value as time passes.
  • it increases in value as the stock rises and decreases in value as the stock falls. 

Two big reasons traders buy calls instead of stock are leverage and limited liability. 

  • The leverage aspect means that a small move in the stock can generate a significant move in the option. For example, the stock might rise 4% while the option increases 40%. Long calls can supercharge your gain. 
  • The limited liability refers to your risk being capped at the original trade cost. For example, if you buy a call for $3, then no matter how much the stock drops, you can’t lose more than $3. 

In next Monday’s webinar, we will dive into more examples of using calls to limit risk while enhancing returns.


🛑 Upcoming Options Trading 101 Webinar: How to Swing Trade with Options with Coach Tyler Craig | February 14th, 2022 at 8:30 PM EST on YouTube

Join us to learn how to use two simple options trading strategies – the Long Call and Long Put – when Swing Trading. Traders use Technical Analysis in price charts to determine when to buy and sell. Many traders use the stock itself, but options are a great product to consider as well, as they bring leverage, complexity, more dynamic reward to risk ratios, and more.

In this webinar you will learn:

✅ What is Swing Trading
✅ How to use Technical Analysis to identify entry points
✅ What is a Long Call Option
✅ Long Call Risk Graph
✅ What is a Long Put Option
✅ Long Put Risk Graph
✅ How to Swing Trade with Options

Click on the button below to go to YouTube and set a reminder so you won’t miss it when Coach Tyler goes LIVE.


Video of the Day: Gino’s Gems – 6 Ways To Speed Up Your Thinkorswim (TOS)

In today’s Gino’s Gems, Coach Gino Poore teaches how to speed up your Thinkorswim (TOS).


Chart of the Day: Bitcoin Finds a Bottom

Chart of the Day: Bitcoin Finds a Bottom (/BTC)

Crypto lovers rejoice. Bitcoin finally found a bottom and broke above its descending trendline for the first time since the downtrend began last November.


Today’s line up

Tales of a Technician: Did Bitcoin Just Bottom?

Bitcoin has taken investors on a wild ride by falling 53% over the past four months. But, let’s be honest. It wasn’t wild. It was normal. The crypto king is famous for flying or dying and has a history littered with 50%+ bear markets.

Traders Lounge 11AM EST

Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.

The Coaches Show 8:30 PM EST

This is our weekly MasterMind group. Join the coaches tonight, 8:30 PM EST to discuss the markets and help you prepare for the week.

Halftime Report 12:30 PM EST

The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day, and fun in a way that only Matt and Tim can deliver.


Tackle Trading: Financial Freedom is a Journey. Sign up now for a 15-day free trial.

Financial freedom is a journey

Sign up now and gain unfettered access to all of the quality content and powerful Scouting Reports that our Pro Members enjoy for 15-days absolutely free with no strings attached and let us show you what your trading has been missing.


Legal Disclaimer

Tackle Trading LLC (“Tackle Trading”) is providing this website and any related materials, including newsletters, blog posts, videos, social media postings and any other communications (collectively, the “Materials”) on an “as-is” basis. This means that although Tackle Trading strives to make the information accurate, thorough and current, neither Tackle Trading nor the author(s) of the Materials or the moderators guarantee or warrant the Materials or accept liability for any damage, loss or expense arising from the use of the Materials, whether based in tort, contract, or otherwise. Tackle Trading is providing the Materials for educational purposes only. We are not providing legal, accounting, or financial advisory services, and this is not a solicitation or recommendation to buy or sell any stocks, options, or other financial instruments or investments. Examples that address specific assets, stocks, options or other financial instrument transactions are for illustrative purposes only and are not intended to represent specific trades or transactions that we have conducted. In fact, for the purpose of illustration, we may use examples that are different from or contrary to transactions we have conducted or positions we hold. Furthermore, this website and any information or training herein are not intended as a solicitation for any future relationship, business or otherwise, between the users and the moderators. No express or implied warranties are being made with respect to these services and products. By using the Materials, each user agrees to indemnify and hold Tackle Trading harmless from all losses, expenses and costs, including reasonable attorneys’ fees, arising out of or resulting from user’s use of the Materials. In no event shall Tackle Trading or the author(s) or moderators be liable for any direct, special, consequential or incidental damages arising out of or related to the Materials. If this limitation on damages is not enforceable in some states, the total amount of Tackle Trading’s liability to the user or others shall not exceed the amount paid by the user for such Materials.

All investing and trading in the securities market involves a high degree of risk. Any decisions to place trades in the financial markets, including trading in stocks, options or other financial instruments, is a personal decision that should only be made after conducting thorough independent research, including a personal risk and financial assessment, and prior consultation with the user’s investment, legal, tax and accounting advisers, to determine whether such trading or investment is appropriate for that user.

Chart Modal

Tackle Trading

Book a FREE Consultation

Sign up for a free consultation to build your Educational Plan.