What is call option?

Definition of Call Option, Call Option Meaning - The Economic Times Definition: Call option is a derivative contract between two parties. The buyer of the call option earns a right (it is not an obligation) to exercise his option to buy a particular asset from the call option seller for a stipulated period of time.

What is a call option in Indian stock market?

Call option is a type of option contract traded in the Indian stock market. A call option is a derivatives contract that allows the buyer to benefit from an up move in the underlying. A call option buyer has the right to buy the underlying asset at a predetermined price, at a predetermined time.

What is the difference between a call option buyer and a seller?

A call option buyer has the right to buy the underlying asset at a predetermined price, at a predetermined time. Similarly, the call option seller, also known as “writer”, has an obligation to sell the underlying asset at the predetermined strike price when the buyer of the call option exercises this option.

How do you trade call options?

There are two basic ways to trade call options. Long call option: A long call option is, simply, your standard call option in which the buyer has the right, but not the obligation, to buy a stock at a strike price in the future. The advantage of a long call is that it allows you to plan ahead to purchase a stock at a cheaper price.