Glossary

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Call option

A call option carries the right but not the duty to buy an underlying asset (e.g. share or commodity) within a contractually determined period and at a predetermined price. Call options can generate sizeable profits when prices rise.

Call options involve more risk than an investment in the underlying asset itself because any changes in the price of the underlying have a disproportional impact on the price of the option (leverage effect). Investors often fail to make use of their right to take delivery of the underlying asset, preferring to sell the option before the last day of trading on the stock exchange.

See alsoPut optionEurexFutures market
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