Part 3(Bonds)

A call option gives the owner of the option the right to buy a specific asset at a specific price on or before a specific date.

Suppose you see an advertisement for a computer selling for $499 that you would like to purchase. You race to the store, but when you arrive you are unsure you want to buy the computer because it isnt quite what you expected. The sale ends today, but the owner of the store decides that if you are willing to pay a fee of $10 he will sell you the computer for the sale price any time in the week. What is the call option in this example? What is the call price? What is the price of the call option? When does the option mature?

Have you ever purchased or exercised a call option?