Glossary term
Call Option
A contract giving the buyer the right, not the obligation, to buy the underlying at a fixed strike price before expiry; buyers gain leveraged upside, sellers collect premium.
A call option gives its buyer the right — but not the obligation — to buy the underlying at a fixed strike price on or before expiry, in exchange for an upfront premium. Buyers use calls to chase upside with leverage: a far out-of-the-money call can multiply in value on a sharp rally while risking only the premium paid. The seller — often a market maker — takes the other side, collecting premium and carrying the obligation to deliver shares if assigned. A call's sensitivity to the underlying is its delta, which itself shifts via gamma as price moves.