# Stock call option definition

Upper Saddle River, New Jersey The call contract price generally will be higher when the contract has more time to expire except in cases when a significant dividend is present and when the underlying stock call option definition instrument shows more volatility. Determining this value is one of the central functions of financial mathematics. Importantly, the Black-Scholes formula provides an estimate of the price of European-style options. Unsourced material may be challenged and removed.

A Practical Guide for Managers. Articles needing additional references from October All articles needing additional references. This article is about financial options.

The term "call" comes from the fact that the owner has the right to "call the stock away" from the seller. Unsourced material may be challenged and removed. The seller or "writer" is obligated to sell the commodity or financial instrument to the buyer if the buyer so decides. When a call option is in-the-money stock call option definition.

Moreover, the dependence of the option value to price, volatility and time is not linear — which makes the analysis even more complex. Importantly, the Black-Scholes stock call option definition provides an estimate of the price of European-style options. Unsourced material may be challenged and removed.

The most common method used is the Black—Scholes formula. Similarly if the buyer is making loss on his position i. Retrieved from " https:

For call options in general, see Option law. Unsourced material may be challenged and removed. Option values vary with the value of stock call option definition underlying instrument over time. Moreover, the dependence of the option value to price, volatility and time is not linear — which makes the analysis even more complex.

Trading options involves a constant monitoring of the option stock call option definition, which is affected by the following factors:. October Learn how and when to remove this template message. Energy derivative Freight derivative Inflation derivative Property derivative Weather derivative. The buyer pays a fee called a premium for this right.

Articles needing additional references from October All articles needing additional references. Trading options involves a stock call option definition monitoring of the option value, which is affected by the following factors:. Similarly if the buyer is making loss on his position i. Adjustment to Call Option: