Definition of «call option»

A call option is a financial contract that gives its holder the right, but not the obligation, to purchase an underlying asset at a predetermined price (strike price) before or on a specified expiration date. The buyer of the call option hopes that the value of the underlying asset will increase above the strike price, allowing them to profit from the difference in prices.

Sentences with «call option»

  • We like to buy them at a discount to what we believe their fair value is, and then sell call options with strike prices equal to what we feel their fair value is. (borntosell.com)
  • The purchase of call options allows an investor to profit from a short term rise in the price of the underlying security. (pocketsense.com)
  • For example: someone who goes long cocoa at 850 can write a 900 strike price call option with about one month of time until option expiration. (cannontrading.com)
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