Call Option

Definitions: Call Option

Call Option

Noun

1. An option to buy.

2. The option to buy a given stock (or stock index or commodity future) at a given price before a given date.

Specialty Definitions: Call Option

Domain	Definitions
Agriculture	A contract that entitles the buyer the right, but not the obligation, to purchase an underlying futures contract at a stipulated basis or strike price at any time up to the expiration of the option. The buyer pays a premium to the seller for this contract. A call option is bought with the expectation of a rise in prices. See put option. (references)
Finance	Option contract that gives the holder the right to purchase a standardized quantity of a specified asset at a fixed price at or within a designated date or the right to receive the settlement price of the underlying value less the exercise price of the option at or within a designated date. Source: European Union. (references)
	An option to purchase designated securities at a predetermined price within a specified time limit. Source: European Union. (references)
	The option to buy a given amount of a commodity at a specified price during a specified period of time. Opposite of put option. (references)
Source: compiled by the editor from various references; see credits.

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Specialty Definition: Call option

(From Wikipedia, the free Encyclopedia)

A call option is a financial contract between two parties, the buyer and the seller of the option, that allows the buyer, then owner, of the option the right but not the obligation to buy an agreed quantity of a particular commodity or financial instrument from the seller of the option at a certain time (or times depending on the exact specification of the contract). for a certain price, known as the strike.

"Selling" in this context is not supplying something that the seller owns, but it means granting the buyer this right, against a fee.

The most widely-known call option is that when the option is to buy stock in a particular company. This is a stock option. However options are traded on many other quantities both financial, such as interest rates (called an interest rate cap) or foreign exchange rates (see foreign exchange option) and physical such as gold or crude oil.

Example of a call option on a stock

I might enter a contract to have the option to buy a share in Microsoft Corp. on June 1 2005 for $50. If the share price is actually $60 on that day then I would exercise my option (i.e. buy the share from the counter-party). I could then sell it in the open market for $60, i.e. the option would be worth $10; my profit would be $10 . If however the share price is only $40 then I would not exercise the option (if I really wanted to own such a share, I could buy it in the open market for $40, why waste $50 on it). My option would be be worth nothing. Thus in any future state of the world, I am certain not to lose money by owning the option. This implies that the option itself must have some positive value (the price of the option). This value varies with the share price and time. The science of determining this value is the central tenet of financial mathematics. The most common method is to use the Black-Scholes formula. Whatever the method used, the buyer and seller must agree this value initially and the buyer pays the seller this value as a fee.

Like in the case of share trading, buyers and sellers of options do not usually interact directly with each other; the options exchange is intermediary and quotes the market value of the option. The seller has to supply a guarantee to the options exchange that he can fulfill his obligation if the buyer chooses to execute his option.

Compare also

Put option

Source: adapted by the editor from Wikipedia, the free encyclopedia under a copyleft GNU Free Documentation License (GFDL) from the article "Call option."

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Synonym: Call Option

Synonym: call (n). (additional references)

Antonym: put option (n). (additional references)

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Crosswords: Call Option

English words defined with "call option": caller, covered option ♦ naked option ♦ straddle. (references)

Specialty definitions using "call option": AIOD allows, Area yield options contract ♦ fast select ♦ IBM 1620 ♦ long synthetic ♦ option buyer ♦ protected short sale ♦ Real Programmers Don't Use Pascal ♦ synthetic long, synthetic long buy, synthetic long position, synthetic put. (references)

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Commercial Usage: Call Option

Domain	Title
Books	Strategies for put and call option trading (reference) The Stockbroker's Guide to Put and Call Option Strategies. (reference) (more book examples)
Source: compiled by the editor from various references; see credits.

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Frequency of Internet Keywords: Call Option

The following statistics estimate the number of searches per day across the major English-language search engines as identified by various trade publications. Hyperlinks lead to commercial use of the expression at Amazon.com.

Expression	Frequency per Day
call option	102
covered call option	24
stock call option	19
call option put stock	3
conference call option	2
Source: compiled by the editor from various references; see credits.

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Modern Translations: Call Option

Language		Translations for "call option"; alternative meanings/domain in parentheses.
Danish		call option (call). (various references)

Dutch		calloptie (call), vraagpremie (buyer's option), premieaffaire te leveren (buyer's option), koopoptie (call), haussepremie (buyer's option, call). (various references)

Finnish		osto-optio (buyer's option). (various references)

French		call (call), prime pour lever, prime directe, prime � la hausse, option de rachat (call), option d'achat (call), marché � prime pour lever. (various references)

German		Call (call), Vorprämiegeschäft (buyer's option), Vorprämie (buyer's option), Lieferungsprämie (buyer's option), Kaufoption (buyer's option, call), Hausseprämie (buyer's option), Bezugsprämie (buyer's option). (various references)

Italian		call (call), premio per non ritirare (buyer's option), premio al rialzo (buyer's option), opzione di acquisto (buyer's option, call). (various references)

Pig Latin		allcay optionay.(various references)

Portuguese		prémio � alta (buyer's option), opção de compra (buyer's option). (various references)

Spanish		call (call), opción de compra (call). (various references)

Swedish		köpoption (buyer's option). (various references)
Source: compiled by the editor from various translation references.

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Anagrams: Call Option

Scrabble® Enable2K-Verified Anagrams
	Words within the letters "a-c-i-l-l-n-o-o-p-t"
	-1 letter: collation.
	-2 letters: colonial, cotillon, location, optional, platonic.
	-3 letters: capitol, caption, coalpit, coolant, copilot, octanol, optical, paction, platoon, topical.
	-4 letters: action, alnico, apollo, atonic, atopic, caplin, cation, catlin, catnip, citola, clinal, clonal, coital, collop, coloni, coplot, latino, lintol, lotion, octopi, oilcan, option, plaint, pliant, plical, pontil, potion, talion, tincal.
	-5 letters: actin, allot, aloin, antic, atoll, canto, capon, clapt, clipt, cloot, coapt, coati, colin, colon, conto, coopt, copal, cotan, inapt, lapin, lilac, linac, llano, local, lotic, nicol, nopal, notal, octal, octan, ontic, optic, paint, panic, panto, patin, patio, piano, pical, picot, pilot, pinot, pinta, pinto, piton, plain, plait, plant, plica, point, polio, talon, tical, tolan, tonal, tonic, topic, topoi.
	Words containing the letters "a-c-i-l-l-n-o-o-p-t"
	+2 letters: compellation, nonpolitical, postcolonial.
	+3 letters: compellations, paleontologic.
	+4 letters: nonpolitically, occupationally, paleobotanical, photogenically, planetological.
	+5 letters: anisotropically, anthropological, compositionally, computationally, paleontological, pinocytotically.
Source: compiled by the editor from various references; see credits. SCRABBLE® is a registered trademark. All intellectual property rights in and to the game are owned in the U.S.A and Canada by Hasbro Inc., and throughout the rest of the world by J.W. Spear & Sons Limited of Maidenhead, Berkshire, England, a subsidiary of Mattel Inc. Mattel and Spear are not affiliated with Hasbro.