What is a call option?

Call options are financial contracts that give the buyer the right—but not the obligation—to buy a stock, bond, commodity, or other asset or instrument at a specified price within a specific period. A call seller must sell the asset if the buyer exercises the call. A call buyer profits when the underlying asset increases in price.

Who has the right to buy a call option?

The buyer of the call option has the right, but not the obligation, to buy an agreed quantity of a particular commodity or financial instrument (the underlying) from the seller of the option at or before a certain time (the expiration date) for a certain price (the strike price ).

What is the difference between a call option and a put option?

A call option may be contrasted with a put option, which gives the holder the right to sell (force the buyer to purchase) the asset at a specified price on or before expiration. A call is an option contract giving the owner the right, but not the obligation, to buy an underlying security at a specific price within a specified time.