Is a ‘Call’ Just a ‘Call’?
Trading options allows the options trader the ability to trade many different ways. If one traders says they know how to trade a “call”, it doesn’t mean that another trader will trade a call the same way. The flexibility in options means that everyone’s trade set ups to initiate, manage and exit that call will probably be different. So a call really isn’t just a call.
Let’s take a look at this example:
This MSFT 60 mins chart shows a great example of the opportunity to purchase a call. The chart is in a trend, and has pulled back to $65.75 today. With yesterdays highs up at $66.40, it looks like a great opportunity to buy a call and expect price of MSFT to resume its highs and the long trend.
Now the real question for an options trader is…
What strike to purchase and how long do you want to hold this trade?
These details are where an options trader who trades “calls” will vary their trades. Depending on whether you think the price of the stock will move up quickly vs slowly will change the time frame for the trade. Also, pricing of a call whether it is in ‘in the money’ ‘at the money’ or ‘out of the money’ will also influence the cost to purchase the call and the resulting profit or loss when you exit.
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