Call Options

Summary

Call options are one of the building blocks of options trading. In this lesson you will learn how a call contract works, what strike price and expiration mean, and why traders use calls to express a bullish view with defined risk.

Key Takeaways

• A call option gives the buyer the right to purchase shares at the strike price.
• The premium paid is the most the buyer can lose on the trade.
• Call buyers profit when the underlying stock rises above the strike price plus the premium.
• Time decay accelerates as the option approaches expiration.