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.
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.
You buy a $50-strike call. The stock rises to $60: your right to buy at $50 is now valuable.
Understanding a term is good. Applying it on a real platform with a clear method is better. That is exactly what we do in 5 days.