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Call Option

A Call Option is a financial contract in options trading that gives the holder (buyer) the right, but not the obligation, to purchase an underlying security at a predetermined price, referred to as the strike price, before or at a specified date, known as the expiration date

For instance, let’s say you buy a call option to purchase shares of a particular company at ₹50 per share anytime within the next 3 months. If, within this period, the share price rises to ₹60, you can exercise your call option and buy the shares at the agreed price of ₹50, making an immediate profit of ₹10 per share. 

It’s important to remember that purchasing a call option involves a premium, which is the cost of buying the option. This premium is paid upfront when the contract is written and is non-refundable. Basically, a call option is a bet that the price of the underlying asset will increase, giving the holder an opportunity to buy at a lower price.

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