TABLE OF CONTENTS Call options (European-style) give the holder the right, but not the obligation, to buy a fixed number of shares of a named company at a fixed price on a specified date.
The title European does not refer to where the option is traded London, Frankfurt/Main, Paris, Amsterdam, etc. but to the fact that the right to buy the shares at a fixed price is only applicable on the date specified in the contract. Although, over its lifetime, it may be possible to trade the option on an exchange or over the counter as an instrument in its own right, actual transfer into the underlying shares can only take place on the date specified in the contract. The specified date in a European-style contract is the expiration date of the contract, i.e. the date on which the contract matures. The purchaser of a call option is taking a long position and is called the holder of an option.
The fixed price at which exercise takes place is called either the strike or the exercise price. Making use of this right to buy is called exercising exercising the right to buy the shares at the strike price. If an option contract is held under expiration but the holder chooses not to exercise the right to buy on that date the contract expires worthless.
Call options (American-style) give the holder the right, but not the obligation, to buy a fixed number of shares of a named...
