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Call Option
A contract that gives the holder the right to buy an asset at a specified price within a certain time period, often used in acquisition financing or structuring deals.
Implications
A financial contract that gives the buyer the right, but not the obligation, to purchase an asset at a specified price within a certain time period, often used in stock and commodity markets.
Example
Example: An investor buys a call option on Apple stock, giving them the right to purchase shares at a set price within the next three months.
Related Terms
Different from a put option, which gives the right to sell, a call option is focused on buying an asset at a predetermined price.
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