UK Accounting Glossary
A call is a type of option contract. A call option gives the call owner the right (but not the obligation) to buy the specified asset at a specific price, or exercise the option. Numerous call options are publicly traded, for various assets, expiration months, and strike prices. A call can be used for hedging or for speculation. An American call can be exercised any day until maturity while a European call option can only be exercised on the expiration date. The exchange-traded call option is usually an American style option. The cost to buy the right a call provides is the price of the call. A call will be exercised at a profit by the holder at expiration (if not sooner) when the market price of the asset is higher than the strike price of the call less the cost and commissions of buying the call.
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This glossary post was last updated: 4th February 2020.