The Basics Of A Call Option
Thursday, August 7th, 2008What is a Call Option?
A call option is a contractual agreement between the buyer and the seller of the option that gives the right, but not the obligation, for an options holder to buy a specified number of shares of a security at a predefined price(strike price) within a predefined amount of time. Options traders purchase call options with the belief that the security will be above the strike price by the time the option expires. The call option allows buyers to lock in a much lower purchase price if the stock has moved higher.
