A Call Option is security that gives the owner the right to buy shares of a stock or an index at a certain price by a certain date. That "certain price" is called the strike price , and that "certain date" is called the expiration date.

A call option is defined by the following 4 characteristics:. A call option is called a "call" because the owner has the right to "call the stock away" from the seller. It is also called an "option" because the owner has the "right", but not the "obligation", to buy the stock at the strike price. In other words, the owner of the option also known as "long a call" does not have to exercise the option and buy the stock--if buying the stock at the strike price is unprofitable, the owner of the call can just let the option expire worthless.

The most attractive characteristic of owning call options is that your profit is technically unlimited.

And your loss is limited to the amount that you paid for the option. Look at this call options payoff diagram and you will see what I mean. Theoretically the stock price can go to infinity so that is why they say the earnings from owning a call option are unlimited.

Since owning options is always cheaper than owning the stock itself, when you KNOW a stock price is about to move up it is ALWAYS more profitable to own calls on the stock than it is to own the stock itself! Keep reading and I will explain why. Take a look at the screen shot to the right that is from my Etrade account.

Since call options give the owner the right to buy a stock at a fixed price, owning calls allows you to lock in a maximum purchase price for a stock.

It is a maximum purchase price because if the market price is lower than your strike price, then you would buy the stock at the lower market price and not at the higher exercise price of your option. It is called " a call option " because it allows you to "call" the stock away from somebody ie, buy it.

Apple Earnings Call - Apple

Calls trade on an exchange The Chicago Board of Options Exchange-- CBOE , just like stocks do. Like all securities, all calls and puts have a unique ticker symbol and their prices are determined by the market's buyers and sellers.

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The collection of buyer and sellers, and their expectation of the movement of the underlying stock, determine the current prices. Look at the screen print of the MSFT options above. If you think a stock price is going to go up, then there are 3 trades that you can make to profit from a rising stock price:.

Calls and Puts Trading Tip: Before we get too far along in talking about call options and trading call options, you need to understand that a stock price can move in three directions, not just two:. Keep these 3 directions in mind as you read on. The rest of this page is devoted to understanding what call options are.

Here are the top 10 option concepts you should understand before making your first real trade:. Options trade on the Chicago Board of Options Exchange and the prices are reported by the Option Pricing Reporting Authority OPRA:. What are Stock Options? Call and Put Options Weekly Options Binary Options American Style Options European Style Options LEAP Options Index Options Call Options What are Call Options?

What are call options? What is a Stock Option? Call and Put Option Weekly Option Binary Option American Style Option European Style Option LEAP Option Index Option.

What is a Call Option? What is a Put Option? Make Money with Put Options Long Put Options In The Money Put Options.

One Missed Call () - IMDb

How To Buy Calls Selling Calls Writing Covered Calls Using A Stop Order Selling A Naked Call Selling A Naked Put Exercising An Option Options Pricing Black Scholes Valuation. Best Option Brokers Binary Options Brokers Best Options Newsletters. Option Definitions At The Money In The Money Deep In The Money Out Of The Money Expiry Dates Ex-Dividend Dates Volatility Index. How do You Make Money Trading Calls? A call option is defined by the following 4 characteristics: There is an underlying stock or index There is an expiration date of the option There is a strike price of the option The option is the right to BUY the underlying stock or index.

Before we get too far along in talking about call options and trading call options, you need to understand that a stock price can move in three directions, not just two: A stock price can go up A stock price can go down, and It can stay the same!

Make money with call options. Here are the top 10 option concepts you should understand before making your first real trade: What is a Call?

Intro to CALL

What is a Put? Option Expiration Strike Price Understanding Option Pricing Best Discount Option Brokers Buying A Call Option Making Money with Options Exercising Options Writing Call Options. CBOE OPRA SEC OIC.