A call option gives the long party the right to buy the underlying asset at a predetermined price,so:

Question

Quizplus · Accepted Answer

The price of the call option is positively related to the price of the underlying asset, as the higher the price of the asset, the more valuable the right to buy it becomes. The long party may or may not exercise the option, depending on whether the call price is greater than the price of the underlying asset at the maturity date. They are not obligated to exercise the option. Option D is incorrect because the long party has the choice whether or not to exercise the option.

A Call Option Gives the Long Party the Right to Buy