A CALL option is a contract that gives the buyer the right, but not the obligation, to buy a stock at a specific price (called the strike price) before a certain expiration date. Investors usually buy CALL options when they believe a stock’s price will go up, because the value of the CALL increases as the stock rises above the strike.
When you sell a CALL option, you’re agreeing to sell the stock at the strike price if the buyer decides to exercise it. In return, you receive a premium upfront. If you already own the stock, this is known as a covered CALL, and it’s a popular way to earn extra income while holding your shares.
CALL options can be used for speculation, income, or hedging — but like all options, they carry risks. It’s important to understand how they work and to use them on stocks you’re comfortable trading or owning.