Call Option
A call option is a derivative contract granting the right, but not the obligation to the holder, to buy an underlying asset—shares, commodities, or currencies—at a set price before a deadline. It has three key parts: the premium (the cost to purchase the option); the strike price (the agreed-upon price for the asset) and the expiration date, after which the option becomes worthless if unused. Buyers pay the premium for potential profit if the asset’s price rises above the strike, while sellers pocket it, betting the price stays below.
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