Call option

The right to buy the underlying currency at a specified price and on a specified date. It is a contract that gives the holder the right to purchase a specified quantity of the underlying asset at a predetermined price (the exercise price) on or before a fixed expiration date.
A call option is a contract that gives the purchaser the right to buy a security from a seller at a certain price on a certain date (called the expiry date). Say you enter into an agreement with a seller for the right to buy 100 shares at a price of $1,000 today. Assume it costs you to $50 to enter into this agreement. On the expiry date, say the market value of 100 shares increases to $1,200. You would then exercise the call option to buy the shares for $1,000, and then sell the same shares on the open market for $1,200, giving you a gross gain of $200 (or a net gain of $150: $200 minus $50). If the market value of the share had decreased from $1,000 to $800, you would not have exercised the call option, but you would have forfeited the $50 transaction cost.
Mack Chen 3/12/2018