A call option gives the owner the right, but not the obligation, to buy the underlying shares at a specific price (the strike price) at or before a specific date (the expiry date)..
The buyer of a call option wants the price of the underlying instrument (such as a share) to increase in the future. The seller of a call option is happy to give up the winnings from a price rise in return for the premium, which is paid immediately. The seller still has the opportunity to profit from the transaction should the price fall.
RELATED TERMS
RESOURCES & OFFERS
Free Investing Newsletter on Asian and Australian markets. Be ahead of the curve with TheBull.
Read moreJoin CommSec now and get $600 free brokerage.
Find out more© Copyright The Bull. All rights reserved.