A call option is a tradable security that gives the buyer of the call option the right to buy stock at a certain price "strike price" on or before a certain date "expiration date".

Likewise, the seller of a call option is obligated to sell stock at a certain price by a certain date if the buyer chooses to exercise his right.

Call Option

The buyer and seller agree in advance on 1 the stock involved called the "underlying security" or "underlying" , 2 the duration of the option "expiration date" , 3 the exercise price "strike price" , and 4 the price of the option.

Like stocks, there are many investors buying and selling options every day and each has a bid and ask price quoted by the exchanges.

A put option is the opposite of a call option: Born To Sell is not concerned with put options and will focus this tutorial on call options and covered calls. Login Free Trial Free Newsletter.

Hughes Optioneering

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