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Investing & the Stock Market vocabulary · Derivatives

Call option

Meaning in investing & the stock market, with examples

/ˈkɔːl ˌɑːpʃn/nounCommon term

In investing & the stock market, call option means: An option that gives the buyer the right to buy an asset at a fixed price, the strike price, until or on a set date. Its value usually rises when the asset's price rises.

In Turkish: alım opsiyonu, call opsiyonu

How it is used

Traders buy calls when they expect a price to rise and sell or write calls to earn the premium. A call is 'in the money' when the market price is above the strike and 'out of the money' when it is below. In speech people simply say 'calls'.

Example sentences

  1. He bought call options with a strike price of 50 because he expected strong results.

  2. The call option became valuable when the index rose well above the strike.

Common collocations

  • buy a call option
  • sell call options
  • call option premium
  • in the money
  • covered call
  • put optionAn option that gives the buyer the right to sell an asset at a fixed price, the strike price, until or on a set date. Its value usually rises when the asset's price falls.
  • optionA contract that gives the buyer the right, but not the obligation, to buy or sell an asset at a fixed price before or on a certain date, in exchange for a payment called the premium.
  • derivativeA financial contract whose value depends on the price of something else, such as a share, an index, a currency, an interest rate or a commodity.
  • leverageThe use of borrowed money or financial products to control a larger investment than your own money would allow, which increases both possible gains and losses.

More terms: Derivatives

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This page explains English vocabulary for learners. It is not financial advice.