Worked example — long call (anonymized)¶
Ticker is fictional. Numbers are rounded so you can see the shape, not copy a trade.
Not financial advice
Not a recommendation. Size against your 2% cap.
Setup¶
- Stock “XYZ” at $50
- Buy 1 XYZ 55-call, ~30–45 days out, debit **\(1.20** (\)120)
- Max loss if you hold and it expires worthless: $120
- Against a 2% equity cap this is a small long-option: the cap is not the binding constraint; time decay is
Thesis (example)¶
“I think XYZ can clear 55 before this monthly expiry because … (must be specific). If it has not by ~21 DTE I will close.”
Why this is ladder step 1¶
You can only lose the premium. No short option, no 100-share requirement. Journal the debit, the invalidation, and the 21 DTE default from the checklists.
Exits¶
| Outcome | Typical action in this curriculum |
|---|---|
| Thesis dies or ~21 DTE | Close, even at a loss |
| Big winner early | You may take profit; that is preference, not a law |
| Hold to expiry ITM | Exercise/assignment and FX rules matter on U.S. names — USD account on |
Not financial advice.