Call Option

   

Definition: a Call Option is one of the two main types of options.
An option is a legal agreement (contract) between 2 parties, in which one party acquires the right to trade an underlying security, at an agreed price, on or before a particular date.
For example, an underlying security could be 100 shares in company X.
The right to buy the security is called a "call option" while the right to sell is called a "put option".


   
   

More on financial markets: Asymmetric Information, Moral Hazard.



   

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