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Call Options

A call option gives the buyer the right, but not the obligation, to buy an underlying asset at a specific strike price on or before a specific expiration date. Learn more about call option basics and their payoff diagram.
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A call option gives the buyer the right, but no obligation, to buy an underlying asset at a specific strike price on or before an expiration date.

A call option seller is obligated to sell the underlying asset at the option’s strike price if the option is assigned or the option expires in-the-money.

Each equity option contract is equivalent to 100 shares of the underlying asset.

For example, if you buy a call option with a $100 strike price, you have the right to exercise the option and purchase 100 shares per contract at $100.

It the option costs $1.00, the maximum risk is $100 per contract, and the profit potential is unlimited.

FAQs

How do call options work?

A call option gives the buyer the right, but not the obligation, to buy 100 shares of the underlying asset at a specific strike price on or before a specific expiration date.