A contract between buyer
and seller which gives the buyer the right but not the obligation to buy a specified
amount of gold (or other commodity) at a pre-determined
(strike) price on or before a specified
date (expiry date).
The
seller, or grantor, is obliged to deliver the gold if the buyer wishes to exercise
the option and for that charges a premium.
Usually abbreviated to ‘call’ and is the opposite of put
option.