Call Option
An options contract giving the buyer the right to purchase the underlying asset at the strike price before or on expiration.
Formula
Intrinsic Value = max(0, Spot Price − Strike Price)
A call option profits when the underlying rises above the strike price. The buyer pays a premium to control 100 shares (standard US equity option) without owning them outright.
At expiration, the call has intrinsic value of max(0, Spot − Strike). If the underlying is below the strike, the call expires worthless and the buyer's total loss equals the premium paid.
Calls are used to express bullish directional views, hedge short positions, or construct multi-leg strategies like spreads and condors.
Example
You buy a 30-day TSLA $250 call for $5.00 ($500 total). At expiry TSLA trades at $268. The call is worth $18 intrinsically; your profit is $1,300 on $500 risked.
Related Terms
American vs European Option
Exercise style: American options can be exercised any time before expiry (most single-stock options); European options only at expiry (most cash-settled index options like SPX).
IntermediateButterfly Spread
A 3-leg defined-risk options strategy: buy 1 lower-strike, sell 2 middle-strike, buy 1 higher-strike — all at the same expiry. Max profit if price pins the middle strike.
IntermediateCovered Call
An options strategy where the holder of a long stock position sells a call option against it, generating income at the cost of capping upside.
IntermediateDelta
The rate of change in an option's price for a $1 move in the underlying. Ranges from 0 to 1 for calls and −1 to 0 for puts.
IntermediateIntrinsic Value
The immediate exercise value of an option — how much in the money it is right now, ignoring time and volatility.
IntermediateLEAPS
Long-term Equity AnticiPation Securities — listed options with expirations longer than one year. Used for longer-horizon directional bets or low-cost covered-call strategies.
IntermediateOptions Contract
A contract giving the buyer the right — but not the obligation — to buy or sell an underlying asset at a set price before or on expiration.
BeginnerPut Option
An options contract giving the buyer the right to sell the underlying asset at the strike price before or on expiration.
BeginnerPut-Call Parity
The no-arbitrage relationship linking the prices of a European call and put at the same strike and expiry: C − P = S − K·e^(−rT).
AdvancedStraddle
An options strategy involving the simultaneous purchase (or sale) of a call and a put at the same strike and expiration, betting on large moves (or low volatility).
AdvancedStrangle
An options strategy buying (or selling) an OTM call and OTM put at different strikes but the same expiration, cheaper than a straddle but requiring a larger move to profit.
AdvancedStrike Price
The fixed price at which the option holder can buy (call) or sell (put) the underlying asset if they choose to exercise.
BeginnerVertical Spread
An options strategy involving the simultaneous buy and sell of two options of the same type and expiration but at different strikes, limiting both risk and reward.
Intermediate