Call option

An option that gives the holder the right but not the obligation to buy a security at an agreed upon price (the “strike price”) at any time up to an agreed upon date The holder of the call option is hoping that the price of the underlying security will increase The holder of the call option makes money by purchasing the security at the agreed upon strike price and selling it at the higher actual current market price if the option is exercised In compensation for this benefit a payment (the premium) is made to the seller of the option

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