> For the complete documentation index, see [llms.txt](https://guide.laevitas.ch/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://guide.laevitas.ch/option-strategies/call-option.md).

# Call Option

{% hint style="info" %}
A Call option is a derivative contract that gives the buyer the right, but not the obligation, to purchase 1 unit of an underlying crypto at a certain price (called the  strike price) on or before the expiration date. If the underlying’s price goes up, the value of the Call option increases. Conversely, if it goes down, the value of the call option decreases.
{% endhint %}

## Long Call

**Payoff Diagrams:**

![](/files/Re9d25UCyVRn6iw9bdOd)

**Direction Assumption:** Bullish

**Maximum Profit:** Unlimited

**Maximum Loss:** Limited to Premium paid 

**Breakeven Price:** Strike Price + Premium paid

**Theta:** Passage of Time -> Negative Effect\
The time value of the Long Call's premium, which the holder has "purchased" by paying for the option, generally decreases or decays with the passage of time. Theta decrease accelerates as the option contract approaches expiration.

**Volatility:** \
If Volatility increases -> Positive Effect. \
If Volatility decreases -> Negative Effect.

## Short Call

**Payoff Diagrams:**

![](/files/MH6TPnvtYSs81Q1noFJd)

**Direction Assumption:** Bearish

**Maximum Profit:** Limited to Premium paid 

**Maximum Loss:** Unlimited

**Breakeven Price:** Strike Price + Premium paid

**Theta:** Passage of Time -> Positive Effect\
The time value of the Short Call's premium, which the option seller has "collected" by selling the option, generally decreases or decays with the passage of time. Theta decrease accelerates as the option contract approaches expiration.

**Volatility:** \
If Volatility increases -> Negative Effect. \
If Volatility decreases -> Positive Effect.