Okay. Today we’re answering the common question of what is a call option. There are a couple of ways to answer this. If you are buying a call option, that means you are buying the right to buy a stock at a fixed price, within a set timeframe. If you are selling a call option, then you are taking on the obligation to sell a stock at a fixed price, within a set timeframe.
So really, the answer to this question is two-fold. It depends on what you’re doing. If you’re buying the call, you have the right to buy the stock. If you’re selling the stock, you have the obligation to sell it. The way that I want to answer this question is, this becomes a contract between two investors. That’s the simplest way to answer this question.