A call option is:
A) any option written more than sixty days into the future.
B) an option giving the holder the right to buy a given quantity of an asset at a specific price on or before a specified date.
C) an option giving the seller the right to sell a given quantity of an asset at a specific price on or before a specified date.
D) an option where all rights are granted to the seller of the option.

Question

Quizplus · Accepted Answer

A call option is an option contract that gives the holder the right, but not the obligation, to buy a specific asset at a predetermined price, also known as the strike price, within a specified time frame, usually until expiration. Therefore, option B is the correct definition of a call option. Option A is incorrect because the time frame for an option can vary and is not always more than sixty days. Option C is incorrect because it describes a put option, which gives the seller the right to sell instead of the buyer. Option D is incorrect because all rights are granted to the buyer, not the seller, with a call option.

A Call Option Is