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Finance Dictionary and Glossary of Investment Terms
option that gives the holder the right tobuy the underlying futures contract.
1. A term used to describe the period of time between the opening and closing of some future markets wherein the prices are established through an auction process.2. An option contract giving the owner the right (but not the obligation) to buy a specified amount of an underlying security at a specified price within a specified time.
Noun: The opposite of a put, a call is an option that gives you the right to buy a given stock (or commodity or other asset) at a given price in a given period. You pay a fee for this privilege. For instance, you might buy some IBM calls giving you the right to buy IBM shares at $125 by a certain date. If the stock rises above $125, you make money. If it doesn''t, the call expires worthless, and you''re out the fee you paid. Calls are often used to hedge risk. Covered calls appeal to conservative investors.Verb: A bond issuer might have the right to call a bond, meaning redeem it early, usually because interest rates have fallen.
Bonds: The right to redeem outstanding bonds before their scheduled maturity. Options: The right to buy a specific number of shares at a specified price by a fixed date. (See put)