A contract giving the holder the right to buy an underlying asset at a specified strike price before expiration. Call options increase in value as the underlying asset price rises, allowing investors to participate in upside potential with limited downside risk.
From Old Norse 'kalla' meaning 'to cry out/summon' and Latin 'optio' meaning 'choice.' The term reflects the holder's ability to 'call away' or purchase the asset from the option seller. Call options represent one of the oldest forms of derivatives trading.
Call options are like having a coupon that lets you buy something at yesterday's price, even if the price has skyrocketed! Warren Buffett famously uses call options (through warrants) to get exposure to companies he likes while limiting his initial investment - it's leveraged investing with a safety net.
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