Call option definition
Call options explained
When you buy a call option, you’re taking a long position on the price of the underlying asset. If the price of the underlying market rises above the price of your option before the contract expires, you could exercise your option. This would mean you could buy the asset for below its current market value.But if the price of the underlying falls, you’d have no obligation to buy the asset at the expiry. This means you wouldn’t lose money by paying above market price, although you would lose the premium you paid for the option.