A financial option grants a right, without a corresponding obligation to exercise, to transact at specified terms. A call option is a right to buy and a put option is a right to sell. The contract specifies its permitted exercise times and strike price; the value of that right differs from the exercise payoff at any particular time.
A financial option granting the right to buy its underlying financial asset at a specified strike price . Its exercise payoff on one stock share is the positive part . A European call option permits exercise at expiry, while an American call option also permits earlier exercise. A forward-start call option determines the strike at a future fixing date.
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