What is Call Option? (Part 1)

Call option is a contract gives the buyer of the options the right to buy the underlying security at a particular price (i.e. strike price) on or before a certain date (i.e. expiration date).
The seller (or writer) is, in turn, obligated to sell the security should the buyer decides to exercise the option.

Call option’s price increases when the underlying stock’s price increases, and decreases as the underlying stock’s price decreases (positive relationship).
Hence, typically we will buy a Call Option if we expect a stock will go up before option expires.

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