A call option is a financial contract between a buyer and a seller that gives the buyer the right, but not the obligation, to buy an underlying asset at a specified price within a specific time period. The buyer of a call option has the right to buy an agreed quantity of a particular commodity or financial instrument from the seller of the option at or before a certain time for a certain price, known as the strike price. The seller, also known as the writer, is obliged to sell the commodity or financial instrument to the buyer if the buyer decides to exercise the option. The buyer pays a fee, called a premium, for this right.

Some key features of a call option include:

• Strike Price: The price at which the buyer can buy the underlying asset.
• Expiration Date: The date by which the buyer must exercise the option.
• Premium: The fee paid by the buyer to purchase the option.

Call options can be used for various purposes, such as generating income through a covered call strategy or as part of more complex option strategies. They are considered high-risk investments due to their high degree of leverage, but they offer potentially unlimited profits and limited losses. The price of a call option varies with the value of the underlying asset over time, and determining this value is one of the central functions of financial mathematics. The most common method used to estimate the price of European-style options is the Black-Scholes model.