Options & derivatives

Call option

A call is an option giving the right to buy an asset at a set price (the strike) before expiration. You buy it betting on a rise.

If the price rises above the strike, the call gains value. The buyer's loss is capped at the premium paid, but the potential gain is large. It is a way to bet on a rise with a controlled outlay.

Example

You buy a $50-strike call. The stock rises to $60: your right to buy at $50 is now valuable.

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