A call option is:
A)Any option written more than sixty days into the future.
B)An option giving the holder the right to buy a given quantity of an asset at a specific price on or before a specified date.
C)An option giving the seller the right to sell a given quantity of an asset at a specific price on or before a specified date.
D)An option where all rights are granted to the seller of the option.

Question

Quizplus · Accepted Answer

A call option is a type of financial contract that gives the holder the right (but not the obligation) to buy a specific quantity of an asset (such as a stock, commodity, or currency) at a specified price (the strike or exercise price) on or before a certain date (the expiry or maturity date). This is a bullish or optimistic position, as the holder benefits from an increase in the underlying asset's price. Option writers (sellers) take on the obligation to deliver the asset if the holder decides to exercise the option, and are compensated with a premium paid by the holder. Option contracts typically last for a few months or less, but can be longer in some cases. Therefore, the correct answer is B - an option giving the holder the right to buy a given quantity of an asset at a specific price on or before a specified date.

A Call Option Is