understanding financial jargon
The Call Option gives the owner the right (but not the obligation) to buy a share at some time in the future before an option expiry date, but at a price agreed now. A Call Option could be used to give an investor control of a block of shares but at a much reduced financial layout, because options are a geared investment where the cost of the option is only a fraction of the cost of the underlying shares. Investment banks often use options to accumulate a position in a stock without without having the price react negatively against them, compared to trying to buy the block of shares directly on the market, where their own purchasing actions may cause the market to move against them during the accumulation period.
If an investor wants to buy the right to sell a share in the future they would buy a Put Option.
What to do if you need more help
If you need more help with your specific commercial loan, mortgage or insurance requirement please speak to a professional financial adviser.
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