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A long at-the-money call gives the holder the right, but not the obligation, to buy futures at a specific price for a specific period of time. For example, $20 per barrel for crude oil or $260 per ounce for gold.

The position profits if futures prices rally. Profits are unlimited on the upside; total risk is limited to the premium paid regardless of where futures trade. This trade is helped by increasing volatility, while the passage of time works against it. Hedgers of the underlying commodity can use buy-call strategies to lock in purchase prices and still participate in a price decline. This is known as a "cap."

Position
Premium
Dollar Premium
Delta
By one $20 crude oil call $1.17$1,170 +.52
Maximum risk $1.17 per barrel$1,170 per contract 00
Maximum profit Unlimited on the upside00 00
Break-even futures price $21.1700 00

Position
Premium
Dollar Premium
Delta
By one $260 gold call $6.70$670 +.50
Maximum risk $6.70 per oz.$670 per contract 00
Maximum profit Unlimited on the upside00 00
Break-even futures price $266.7000 00

  

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