A call option gives the buyer the right, but no obligation, to buy an underlying asset at a specific strike price on or before an expiration date.
A call option seller is obligated to sell the underlying asset at the option’s strike price if the option is assigned or the option expires in-the-money.Â
Each equity option contract is equivalent to 100 shares of the underlying asset.
For example, if you buy a call option with a $100 strike price, you have the right to exercise the option and purchase 100 shares per contract at $100.Â
It the option costs $1.00, the maximum risk is $100 per contract, and the profit potential is unlimited.
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