Deep in-the-money call (stock replacement)
A call with little time value that moves almost like the shares for a fraction of the cash.
Bullish1 legDebit
Illustrative: underlying at 100, strikes every 2.5, 45 days to expiry, implied volatility 25%, model prices. One lot = 100 shares.
Key figures
| Opens for | a debit of $878 |
|---|---|
| Max profit | Open-ended as the price rises |
| Max loss | −$878 |
| Break-even | 101.28 |
| Position delta today | +84 shares |
| Outlook | Bullish |
The legs
| Action | Quantity | Option | Model price |
|---|---|---|---|
| Buy | 1 | 92.5 call, 45 days | 8.78 |
How it works
A call with little time value that moves almost like the shares for a fraction of the cash. Single options are the building blocks: the right to buy (a call) or to sell (a put) 100 shares at a fixed price, the strike, until expiry. Combined with shares, they add income or protection to a holding.
When it fits
It suits a view that the underlying holds up or rises before expiry.
What can go wrong
The most it can lose at expiry in this example is −$878. Bought options lose value as time passes, so the move has to come before expiry.
Building it in Trident
In the Strategy Lab, choose deep in-the-money call (stock replacement) and the days to expiry. Trident applies these strike rules to your live chain, prices each leg and draws the trade on the risk graph, where you can drag the days to expiry, change implied volatility or switch on the crash band. When it looks right, send it to order management; nothing reaches your broker until you send it.
Frequently asked questions
What is a deep in-the-money call (stock replacement)?
A call with little time value that moves almost like the shares for a fraction of the cash.
What is the maximum loss on a deep in-the-money call (stock replacement)?
In this illustrative example it is −$878 for one lot at expiry.
Where does a deep in-the-money call (stock replacement) break even?
With the underlying at 100 in this illustrative example, the break-even at expiry is 101.28.
Can I build a deep in-the-money call (stock replacement) in Trident?
Yes. Pick it in the Strategy Lab and Trident chooses the strikes from your live chain, prices the legs and draws it on the risk graph.
Illustrative example with model prices, not a recommendation. Options carry risk of loss. See the risk disclosure.