What does a call option grant the holder the right to do?

A call option is a financial contract that gives the holder the right, but not the obligation, to purchase a specific quantity of an underlying asset at a predetermined price, known as the strike price, within a specified time frame. This means that when an investor holds a call option, they can benefit from an increase in the market price of the asset, as they can buy it at a lower strike price even if the market price rises above that level.

The advantage of a call option lies in its potential for profit; if the market price exceeds the strike price, the holder can exercise the option to buy the asset at the lower price, or alternatively, they can sell the option itself for a profit. This characteristic of call options makes them a popular choice for investors looking to leverage their position in an underlying asset without committing a substantial amount of capital upfront.

In contrast, the other options revolve around different types of rights or actions that do not accurately describe the nature of a call option. For instance, selling at a strike price pertains to put options, which grant the right to sell rather than buy. Trading without restrictions does not apply as options come with specific terms, including time limits and strike prices. Lastly, purchasing current market shares does not encapsulate the