Investment Type: Debit
Strike Prices: ITM/ATM/OTM
Expiration Month: No Restriction
Composition: Buy Call

This is the simplest, most basic and remains to be the most popular options strategy in the world of Options Trading. Beginner traders should understand this strategy thoroughly as more advanced options strategies are based on it.

We will Buy Call when we feel that a stock is going to rally above our strike price within the expiration date that we choose. It is very important not to choose Options which is going to expire in less than 30 days as we need more time to be right and the premium value decrease the fastest in the last 30 days. Unless if there are events that will give big movement to the stock price in short period of time.

Buying ITM Call provides us with more probability to make profit but less amount of money made while OTM Call Options let us make significant profits (in the area of three to four digit percentage) but less probability as stock prices need to move up more in order to make our OTM Call become ITM Call. ATM Call Options stands between the two. Therefore it is very subjective on which strike prices should we choose as it really depends on the trader’s perceptions and predictions.

Bear in mind that we as a buyer don’t have the obligation to exercise. Rather than exercising it to buy the stock, sell it again in the market for profit, we can just simply sell the Options back. (Which requires less money and less hassles)