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This strategy is essentially a way to buy price
protection, while allowing participation in a rising
market at relatively little cost. It is also used for a
bullish outlook, and profits if prices rally. Profits
are unlimited on the upside, and risk is limited to the
premium paid for the options contract, regardless of
where futures trade. An out-of-the-money call requires a
stronger price move than an in- or at-the-money option
to be profitable, but it is also less expensive. This
trade is helped by increasing volatility, but the
passage of time works against buy-call strategies.
