CFinance glossary

Call Option

Quick definition

The right to buy an asset at a set price.

Overview

A call option is a contract that gives the right, but not the obligation, to buy an asset at a set price before a specified date.

Common uses

Hedging against volatility
Speculative strategies
Compensation plans

Examples of use in small businesses

Locking in purchase prices
Aligning employee interests
Managing market risk

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