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StockCram is not a broker-dealer, investment adviser, or financial institution. All content is for educational and informational purposes only and should not be construed as personalized investment advice. Consult a qualified financial professional before making investment decisions. Past performance does not guarantee future results.Simple Definition
The right to BUY a stock at a specific price. You profit if the stock goes up.
Why It Matters
Calls are the most popular option type because they let you bet on a stock going up with limited risk. If NVDA is at $500 and you buy a $520 call for $10, you risk $1,000 max but have unlimited upside if it rallies.
Key Points
- Buying calls = bullish bet with capped downside (you can only lose the premium)
- Calls become more valuable as the stock price rises above the strike price
- Time decay works against call buyers - the closer to expiration, the faster value erodes
Related Terms
Common Questions
The right to BUY a stock at a specific price. You profit if the stock goes up. Calls are the most popular option type because they let you bet on a stock going up with limited risk. If NVDA is at $500 and you buy a $520 call for $10, you risk $1,000 max but have unlimited upside if it rallies.
Calls are the most popular option type because they let you bet on a stock going up with limited risk. If NVDA is at $500 and you buy a $520 call for $10, you risk $1,000 max but have unlimited upside if it rallies.
Buying calls = bullish bet with capped downside (you can only lose the premium)
Calls become more valuable as the stock price rises above the strike price
Time decay works against call buyers - the closer to expiration, the faster value erodes