Call Option

Business, Legal & Accounting Glossary

Definition: Call Option



Full Definition of Call Option


A call option is an option contract that gives the owner (also called the buyer or holder) the right to buy (or “call”) a fixed amount of an underlying security at a stated price within a specified period of time. The owner of a call option has the right to call the security away from the option writer (seller) at a fixed price called the exercise or strike price. The writer of the call option is obligated to sell the security at a fixed price to the option holder if the holder of the call option chooses to exercise the call. An investor who is long a call option has the right to buy the underlying security, while an investor who is short a call option has an obligation to sell that security. A call option holder who exercises the call option will receive 100 shares of the underlying security.


Cite Term


To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
https://payrollheaven.com/define/call-option/
Modern Language Association (MLA):
Call Option. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. December 03, 2020 https://payrollheaven.com/define/call-option/.
Chicago Manual of Style (CMS):
Call Option. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/call-option/ (accessed: December 03, 2020).
American Psychological Association (APA):
Call Option. PayrollHeaven.com. Retrieved December 03, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/call-option/

Definition Sources


Definitions for Call Option are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 4th February, 2020 | 1 Views.