American option refers to an option that allows the option holder to perform the contract on any day before the expiration date of the option. Call option. It means that the option buyer has the right to buy goods or futures contracts from the option seller at a certain price within a specified time, but does not undertake the obligation to buy. Examples of soybean futures

Buy soybean call option premium 100 soybean call option exercise price 5000 buy cost 5 100

Have the right to buy soybean futures at a specified time at a price of 5000.

The actual cost of purchasing soybean futures plus royalties is 5 100.

5200 earned 100 5 100 capital preservation 5050 exercise loss 50 5000 exercise loss 100.

4900 sports MINUS 200; No exercise only loses 100.