Options
Call Option — Definition & Example
A contract giving the holder the right (not obligation) to buy an asset at a specified price by a specified date.
A call option gives the buyer the right to purchase the underlying at the strike price on or before expiry. The buyer pays a premium for this right. Calls are profitable when the underlying rises above the strike plus premium paid. Used both as bullish bets and as part of more complex strategies (covered calls, spreads). Maximum loss for a long call buyer is the premium paid.
Example
NIFTY 24500 CE bought at ₹120 premium with NIFTY at 24400. If NIFTY rallies to 24700 by expiry, intrinsic value = 24700 − 24500 = ₹200. Net profit = 200 − 120 = ₹80 per lot. If NIFTY stays below 24500, the call expires worthless and the ₹120 premium is lost.
Related
See call option in your own trades
Upload your tradebook — TradeSaath calculates this automatically.
Try it free →