Option Strategy: Buying Index Calls

Option strategiesThis simplest strategy involves the purchase of index call option. It is implemented when option traders believe that the underlying index level will rise significantly above the call strike price within a certain period of time.

The risk is limited to the price paid for index call option and profit achieved is unlimited in this strategy.

Profit = Index settlement value- Index call strike price-Premium paid.

Break even point= Index call strike price + premium paid.

Read about Option strategies:
Bull Put Spread
Bull Call Spread