What is a "call" option?
A)A contract that gives the holder the right to sell an instrument at a pre-specified price.
B)A contract that is derived from some other underlying quantity,index,asset or event.
C)A contract that gives the holder the right to acquire an instrument at a pre-specified price.
D)A contract that gives the holder the right to buy or sell something at a specified price.

Question

Quizplus · Accepted Answer

A "call" option is a contract that gives the holder the right to acquire an instrument at a pre-specified price. This means that the holder has the option to buy the underlying asset at the pre-specified price, but is not obligated to do so. It is essentially a bet on the future price of the asset - if the price goes up, the holder can exercise the option and buy the asset at a lower price, thereby realizing a profit.

What Is a "Call" Option