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Call option 1.
An option that gives one party (the option holder) the right, but not the obligation, to purchase from another party (the option writer), an agreed amount (over-the-counter option) or a standardized amount (exchange-traded option) of an underlying at a specified price (the exercise price) at a specified future date (European option) or at any time before a specified expiration (American option), in exchange for a premium paid to the writer.
A call option holder can close its position by selling a call option with the same characteristics, exercise its right, or abandon its option at maturity. The call option writer is obliged to sell the underlying if the holder exercises its right; the writer is bound by the decision of the holder.
Translations
Synonyms and variations
- Call