Call Option

A call option is a financial contract that gives the holder the right, but not the obligation, to buy an underlying asset at a specified price within a predetermined time frame.

Call options are commonly used in financial markets as a way to speculate on the price movement of assets, hedge against potential losses, or generate income through option trading strategies. When an investor purchases a call option, they are betting that the price of the underlying asset will rise above the strike price before the option expires. If the price exceeds the strike price, the option holder can exercise the option and buy the asset at the predetermined price, potentially profiting from the price difference. Call options provide flexibility and leverage for investors seeking to capitalize on market movements while limiting their downside risk to the premium paid for the option.