Call Option

A call option is a contract that gives you the right—but not the obligation—to buy a stock at a set price by a specific date. Think of it as a reservation: you pay a small upfront fee (called the premium) to lock in a purchase price, and you can decide later whether to actually buy. You'll encounter call options when exploring ways to bet on stocks going up or reduce risk on existing positions. For example, you might buy a call option on TechCorp stock at $50, paying $2 per share, giving you the right to buy at that price anytime before the expiration date—even if TechCorp jumps to $70. If it doesn't reach $50, you simply don't exercise the option and lose only your $2 premium.