How Does A Call Option Work? ━━━━━━━━━━━━━ A call option giv | Stock Market News

How Does A Call Option Work?
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A call option gives you the right, but not the requirement, to purchase a stock at a specific price (known as the strike price) by a specific date, at the option’s expiration. For this right, the call buyer will pay an amount of money called a premium, which the call seller will receive. Unlike stocks, which can live in perpetuity, an option will cease to exist after expiration, ending up either worthless or with some value.

The following components comprise the major traits of an option:

Strike price: The price at which you can buy the underlying stock.

Premium: The price of the option, for either buyer or seller.

Expiration: When the option expires and is settled.
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