derivatives

Call Option

A call option is a derivatives contract that gives the holder the right, but not the obligation, to acquire a specified quantity of an underlying asset at a predetermined strike price, in exchange for a premium, before or at expiration.

Example: An investor pays a premium for a call option on a stock with a strike price of $60, expiring in one month; if the stock price exceeds $60 at expiration, the option may have intrinsic value.

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