A call option is:
A)the right to buy an underlying asset at a fixed price for a specified time.
B)the right to sell an underlying asset at a fixed price for a specified time.
C)a price established today for future delivery.
D)a standardized exchange-traded contract in which the seller agrees to deliver a commodity to the buyer at some point in the future.

Question

Quizplus · Accepted Answer

A call option is the right, but not the obligation, to buy an underlying asset (such as a stock or commodity) at a fixed price (strike price) for a specified time period. This option is purchased by the buyer from the seller (writer) in exchange for a premium. If the market price of the underlying asset goes up during the specified time period, the buyer can exercise the option and buy the asset at the strike price, making a profit. If the market price does not go up, the buyer can let the option expire and only lose the premium paid.

A Call Option Is