11.14What is a call option?
1What is it?
A call option gives the right to buy at the strike price. Buyers profit if the price rises above strike + premium.
2Why does it exist?
Used to bet on a rise with limited loss, or (by sellers) to earn premium.
3Diagram
Max profit
Unlimited
Max loss
₹13,000
Breakeven
₹25,200
4Quick revision
- Right to buy.
- Profits above strike + premium.
- Buyer’s loss limited to premium.
5Knowledge check
Q1. Call strike 25,000, premium 200. Breakeven?Show answer
25,200.
Q2. Do call buyers want price up or down?Show answer
Up.
Q3. Call buyer’s max loss?Show answer
Premium paid (200 × 65 = ₹13,000 here).