call option
Definition
Formal contract between an option seller (the optioner) and an option buyer (the optionee) which gives the optionee the right but not the obligation to buy a specified contract, financial instrument, property, or security, at a specified price (called exercise price ) on or before the option's expiration date. Investors who buy call options believe the price of the underlying asset will go up, and they will be able to make a high profit from a small (marginal) investment. Opposite of put option.
call option is in the Commodities & Precious Metals Trading, Disaster Planning & Risk Management, Investing and Securities & Futures Trading subjects.
call option appears in the definitions of the following terms:
Black Scholes option-pricing model,
exercise price,
covered position,
strip,
AC-DC option,
wasting asset,
worst of two option,
option seller,
buy and write,
Garman Kohlhagen model
and
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