What is a call option A call option is an agreement that gives the option buyer the right to buy stocks, bonds, commodities or other tools at a specific price in a specific period, but it has no obligation. Stocks, bonds or commodities are called basic assets.

When the price of the underlying asset rises, the buyer who buys the option gains.

The market price of a call option is called a premium. This is the price of the right provided by the call option. If the underlying asset is lower than the strike price on the maturity date, the buyer of the call option will lose the premium paid.

If the underlying price is higher than the strike price at maturity, the profit is the current share price minus the strike price and premium, and then multiplied by the number of shares controlled by the option buyer.

China's option product, namely call option, is a kind of financial derivative product, which usually comes from securities and is attached to some securities as the basic assets.

At present, the related options products listed in China are: SSE 5,000 ETF options, soybean meal futures options on Dalian Commodity Exchange and soybean meal futures options officially listed on Dalian Commodity Exchange.

Advantages of buying a call option The advantage of a call option is that although it provides the same rising potential as holding a stock, the downside risk is more limited. When investing in stocks, investors can see that the value of their stocks has fallen all the way to zero, which in most cases leads to huge money losses. Although the call option may lose all its value, considering its structure, the total loss is much higher than the frequency of the stock. However, because investors can freely choose the exercise price of the purchased options, investors have greater control over the risks they bear. And usually the cost of a call option is much lower than the cost of buying a stock.