A Call Option is a contract between a buyer and a seller that gives the buyer the right, but not the obligation, to purchase an underlying asset (Such as Stocks, Currencies, or Commodities) at a specified price (known as the strike price) up until a defined expiration date.
In the stock market, call options allow investors to speculate on the price increase of a stock or index, or hedge against potential losses.
Buyer’s Perspective: Pays a premium for the right to buy the asset at the strike price before expiration. Seller’s Perspective: Receives the premium and has the obligation to sell the asset if the buyer exercises the option.
There are Two Types of Trading in Call Option: Call Option Buying and Call Option Selling.
– Example Of Call Option Buying – Potential Profit – Potential Lo – The Payoff Chart for Call Option Buy
– Example Of Call Option Selling – Potential Profit – Potential Lo – The Payoff Chart for Call Option Selling