Long Call
Suppose LeanTree is an equity stock currently selling at $25. You believe LeanTree stock is about to go through the roof and would like to buy a call option on it. Remember, a call option gives the buyer the right to buy at a set price. A call option may look like this:
LNTR Jul 25 call @ 3
LNTR is LeanTree’s ticker symbol. July is the month the option will expire. The 25 refers to the strike price, and “@ 3” means that the price of the option is $3.00 per share.
The $3 price of acquiring this option is called the premium. You pay $300 in total for the options contract, because an options contract always consists of 100 shares. You are now long a call option, meaning that you own a call option.
The price at which you have agreed to buy the security in the future is called the strike price, or the exercise price. Whatever LeanTree stock might do over the next three months, whether it goes up or down, the price you have agreed to pay if you exercise your right to buy is fixed at $25. The expiration date is the last day you can buy at that fixed price. The expiration day is always the third Friday of the month.
Take a look at the d