Long call

Construction: read every leg

One call at 4.20 costs 420 with a 100-unit multiplier. Below 100 at expiry it has no intrinsic value. Above 100, each further dollar adds 100 to intrinsic value. The strike marks where intrinsic begins; 104.20 is the terminal breakeven where it repays the premium. Closing before expiry can produce a gain or loss without crossing that terminal breakeven because time value remains.

Read the ticket before the graph

BUY means you own an option right; SELL means you accept a short-option obligation. Positive quantities are long and negative quantities are short in the calculation. Check quantity, call/put, strike, multiplier and expiry before netting premium.

All legs in this example share November 20, 2026 expiration. The entry observation is October 6, 2026, with fictional QLT at 100. These are independent illustrative premiums, not a current option chain or executable quotes. The terminal diagram assumes every leg and any shares are resolved at one common settlement price.

Before expiry: time and volatility

A standard long vanilla call has positive Delta, Gamma and Vega. Theta is often negative, but its sign is not universal across all model inputs. An IV decline can offset some benefit of a favorable spot move. A farther expiration buys more time but generally also costs more premium.

Manage the position deliberately

Match expiry to the time the thesis needs. Compare a call with shares and a bull-call spread. Selling to close can preserve remaining extrinsic value; exercising merely to realize a mark can discard it. A failed underlying thesis is a reason to reassess, not wait automatically for the option to recover.

From opening cash to a settlement result

Read the opening instructions: buy 1 100 call at 4.20. Option opening cash is $420.00 paid as a debit. A received credit is not earned profit while the obligation remains open.

Set the common settlement price to 103.00. Calls have intrinsic value max(S−K,0); puts have max(K−S,0). Subtract the opening premium from each intrinsic value, then multiply by signed quantity and the 100-unit multiplier. Shares contribute their price change from their own cost. The calculation popup shows every leg.

The combined result is $-120.00 before costs and $-120.65 after illustrative opening fees of $0.65. Exit fees, slippage, funding, dividends and taxes are not included. Opening fees are 0.65 per option contract, not a statement of any broker's pricing.

Maximum terminal profit is unbounded in this model; maximum terminal loss magnitude is $420.00, before costs. Isolated zero-P/L settlement points in the model: 104.2. Move the scenario slider across each strike and explain why the slope changes there. A strike is a contract threshold, not a prediction.

This terminal model is useful for comparing risk shapes, but actual American-style assignment, share delivery, forced liquidation or a failed multi-leg exit can produce a different path. A long protective leg is not an automatic instruction that a broker must exercise it when another leg is assigned.

Open the calculation without leaving this lesson

Check your understanding

Try the question before revealing its answer. These are reading checks, not trading certification or a site completion record.