Call Option

AAA

DEFINITION of 'Call Option'

An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument at a specified price within a specific time period.

INVESTOPEDIA EXPLAINS 'Call Option'

It may help you to remember that a call option gives you the right to "call in" (buy) an asset. You profit on a call when the underlying asset increases in price.

VIDEO

RELATED TERMS
  1. Uncovered Option

    A type of options contract that is not backed by an offsetting ...
  2. Fence (Options)

    A fence or collar is an option strategy that establishes a trading ...
  3. Long (or Long Position)

    1. The buying of a security such as a stock, commodity or currency, ...
  4. Put

    An option contract giving the owner the right, but not the obligation, ...
  5. Frontspread

    A type of options spread in which a trader holds more short positions ...
  6. Fugit

    The amount of time that an investor believes is left until it ...
Related Articles
  1. Exotic Options: A Getaway From Ordinary ...
    Options & Futures

    Exotic Options: A Getaway From Ordinary ...

  2. Reducing Risk With Options
    Options & Futures

    Reducing Risk With Options

  3. How To Avoid Closing Options Below Intrinsic ...
    Options & Futures

    How To Avoid Closing Options Below Intrinsic ...

  4. The Barnyard Basics Of Derivatives
    Investing Basics

    The Barnyard Basics Of Derivatives

Hot Definitions
  1. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center