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Define: Call Options



Call Options are contracts that gives you the right, but not the obligation, to buy the underlying stock (or asset) at a fixed price anytime before it expires.

Call Options rise in value when the underlying stock rises. As call options cost only a small fraction of the price of the underlying stock itself, it is a great leverage instrument in speculating on a rise in a stock's price. Call options can also be shorted (or written) in order to speculate on a drop in a stock's price.

Read the full tutorial on Call Options.