call option

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Related to European call option: put and call, European put option

Call option

An option contract that gives its holder the right (but not the obligation) to purchase a specified number of shares of the underlying stock at the given strike price, on or before the expiration date of the contract.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Call Option

An option contract in which the holder has the right (but not the obligation) to buy the underlying asset at an agreed-upon price on or before the expiration date of the contract, regardless of the prevailing market price of the underlying asset. One buys a call option if one believes the price for the underlying asset will rise by the end of the contract. If the price does rise, the holder may buy and resell the underlying asset for a profit. If the price does not rise, the option expires and the holder's loss is limited to the price of buying the contract. Call options may be used on their own or in conjunction with put options to create an option spread in order to hedge risk.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

call option

See call.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

Call option.

Buying a call option gives you, as owner, the right to buy a fixed quantity of the underlying product at a specified price, called the strike price, within a specified time period.

For example, you might purchase a call option on 100 shares of a stock if you expect the stock price to increase but prefer not to tie up your investment principal by investing in the stock. If the price of the stock does go up, the call option will increase in value.

You might choose to sell your option at a profit or exercise the option and buy the shares at the strike price. But if the stock price at expiration is less than the strike price, the option will be worthless. The amount you lose, in that case, is the premium you paid to buy the option plus any brokerage fees.

In contrast, you can sell a call option, which is known as writing a call. That gives the buyer the right to buy the underlying investment from you at the strike price before the option expires. If you write a call, you are obliged to sell if the option is exercised and you are assigned to meet the call.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.

call option

see OPTION.
Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson

call option

see OPTION.
Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005

call option

See call provision.
The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
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References in periodicals archive ?
Hardy [12] describes the main types of equity indexed annuities (EIAs), point-to-point, annual ratchet and high water mark, in which an embedded European call option has to be priced.
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Applying Ito's formula [20] to the purchasing price Y(t, F) of the corresponding European call options, we obtain
Closed-Form Optimal Strategies of Continuous-Time Options with Stochastic Differential Equations
Although Salam is similar to the European call option as a hedge against future price fluctuations, it, unlike options, does not stipulate the exercise price be less than the expected future price.
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We compare the performance of the BLC method against that of the FD method to compute the European call option prices under the Heston model.
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For a European call option written on the asset with strike price X and maturity T, Bakshi, Cao, and Chen (1997) show that its price C(t, S, v, X) is given as
An empirical comparison of option-pricing models in hedging exotic options
A one-year European call option with a strike price of $10 gives the buyer the right, but not the obligation, to purchase the stock for $10 at the end of one year.
Using implied volatility to measure uncertainty about interest rates
First, we derive a closed-form valuation formula for calculating European call option prices after warrants issuance in the Black-Scholes model.
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Considering a European call option on a nondividend paying stock will illustrate some of the shortcomings of the Black-Scholes-Merton model.(11) This example assumes that the option has a strike price of $100 and expires in 100 days; that the current stock price is $100 and the implied volatility is 15 percent annually; and that the current annual risk-free rate, continuously compounded, is 5 percent.
Issues in Hedging Options Positions
Table 1: Convergence test for European call option values.
Reconstruction of the Time-Dependent Volatility Function Using the Black-Scholes Model
The price of an European call option is the weighted average of two Black (1976) call option formulas [C.sub.b](F, T, K, rs):
Recovering Risk-Neutral Densities from Brazilian interest rate options

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