A call option gives the holder the right to buy 100 shares of the underlying stock at the strike price by expiration. Calls profit when the stock rises above strike + premium paid. A $50 call costing $2 breaks even at $52 and profits dollar-for-dollar above. Long calls are leveraged bullish bets — small capital, potentially large gains, total loss if expired worthless. Selling covered calls on stock you own generates income; you cap upside in exchange for premium. Naked call selling (selling without owning the underlying) has theoretically unlimited risk and is unsuitable for most investors.
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Call Option
August 22, 2026 · Aditya Gupta
Investing
Related terms
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