Call Option
A call option gives the holder the right to purchase an asset at a predetermined price within a specified time frame. Investors use call options to profit from asset price increases without directly owning the asset. This financial instrument is common in hedging strategies, providing potential upside with limited downside risk. Call options are essential for investors seeking to leverage market movements while managing risk.
Key Takeaways
- Grants the right to buy an asset at a fixed price.
- Used to profit from price increases without owning the asset.
- Key tool in hedging strategies.
- Offers potential upside with limited risk exposure.
