TeachMeFinance.com - explain Call
call -- (1) an option to buy a specific security at a specified price within a designated period. (2) to demand payment of a loan because of the failure of the borrower to comply with the terms of the loan. (3) to demand payment for stocks or bonds that have been purchased or subscribed. See "put."
Call -- 1. A demand for early repayment of an obligation, or for the performance of a specific act under a contract.
Call -- A call (on a stock) is a contract or written agreement binding the issuer to deliver to the holder stock named in the agreement within a certain time at a certain price if the holder shall so demand (or in other words, call for the stock). For example, A signs a promise to deliver 100 shares of some specified stock to B at 1OO at any time within 60 days if B makes a demand for it. A sells this promise to B for, say, $100. If within the 60 days the stock rises in price so that B can sell it at a profit B sells and calls on A to make delivery of the stock. The stock must go above 101 before there is a profit for B. If the stock declines or does not go above 101 B, of course, does not call for it and A makes $100 on his risk.
Also, a call is the act of calling off at an exchange or trading place the list of stocks and bonds or the different options or futures (months of delivery) in grain, cotton, coffee, etc. As the various stocks or commodities are called the buyers and sellers make their bids and offers.
The term call also is applied to the demand from the company issuing a stock or share that is not fully paid for a further payment or instalment from the holders; the word thus has come to be used loosely for the amount of the instalment or assessment. This use of the word is, of course, distinct from the term call when an option (privilege) is referred to.
About the author
Copyright © 2005 by Mark McCracken, All Rights Reserved. TeachMeFinance.com is an informational website, and should not be used as a substitute for professional financial or legal advice. TeachMeFinance.com and its owner recommend consultation with a professional financial advisor prior to any investment or financial decision. Please read our disclaimer.