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A contract, purchased for a fee, which gives the buyer the option to purchase an asset at a specified strike price within a specified timeframe.
If the asset increases above the strike price plus fees, they buyer profits. He may buy the asset and immediately sell it at a higher price. However, if the price does not increase substantially, the buyer is penalized because he had to pay a fee for this option and he recoups no cost.
Related Links
Investopedia article on call options
Fidelity article on call options
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