Call Option

Call Option means:
the right, purchased by an investor, to buy a certain number of shares of a particular stock or stock index at a predetermined price before a preset deadline. If a call is exercised, the cost is included in the amount realized by the seller and in the buyer's basis. The gain or loss on a call is a short-term or long-term capital gain or capital loss, depending on the holding period. If the call expires before it is exercised, it is treated as a short-term gain or loss. Former IRC (check if this IRC provision is current here) §§1233 and 1234.

See also other Tax Terms and Definitions in U.S.A.

put option.

U.S. and other Developed Countries International Tax Meaning

Contract under which the holder of the option has the right but not the obligation to purchase securities or commodities on or before a specified date for a specified exercise price.

See also Capital Gain in the American Legal Encyclopedia and Capital Gain in the World Legal Encyclopedia.