A call option is a financial contract that gives the buyer the right, but not the obligation, to purchase a specific asset, usually a stock, at a predetermined price, known as the strike price, within a set time period. Investors buy call options when they believe the price of the underlying asset will rise, allowing them to buy it at a lower price than the market value. If the market price exceeds the strike price before the option expires, the buyer can exercise the option to buy the asset at the lower price. If the price does not rise above the strike price, the option may expire worthless, and the buyer loses only the premium paid for the option.