Call Option
What is Call Option?
An option giving the right to buy an asset at a set strike price before expiration.
Understanding Call Option
A call becomes more valuable as the underlying price rises above the strike price. Buyers profit if the price rises enough to cover the premium paid.
Selling a call earns the premium but obliges the seller to deliver shares at the strike price if exercised. A covered call is written against shares you already own.
Example
Buy one call with a $100 strike for a $3 premium ($300 for 100 shares). If the stock reaches $110 at expiration, the call is worth $10 per share, $1,000, for a $700 profit.