A call option gives its holder the right, but not the obligation, to buy a certain instrument (like a stock or a future), called the underlier or the base contract on or before a certain expiry date at a certain strike price.
If you hold a position in a Call, your potential loss is limited to the price you paid for the option, so called option premium, but your potential profit is unlimited, the higher the base contract trades, the more profit you can get on the expiration date. The profit you get is calculated as base price - strike price or zero if the base price is lower than the strike.
See also european vs american options, put option.
Want to learn more? Download now an interactive reference application for iPhone.
The screenshot shows the following portfolio:
European call struck at 10.000 with expiry in 30 days
This is an excerpt from iOptioneer option trading reference application. In order to build the real-time dynamic strategy graph and run simulations you will need to download the application from App Store.