What is 'Call On A Call'

A type of compound option in which the investor has the right to exercise a call on the underlying asset, which is an option. An investor who owns a call on a call option has until the expiration date to exercise the compound option. If exercised, the investor will receive the underlying call option, which will have a set expiration date and a new exercise price. If the underlying option is exercised, the investor receives the underlying assets.

Explaining 'Call On A Call'

A compound option is an option in which the underlying asset is itself an option - so it is an option on an option. Before expiration, the value of the option depends on the value of the asset the underlying option represents. At expiration, the option can be priced at expiration using the Metron model. This means that the value of the call on a call option (with the underlying good being a stock) increases as the stock's price increases.


An investor will exercise the call on a call option if, at the expiration date, the price of the underlying call option is worth more than the exercise price of the option.

Further Reading

Marginal abatement cost curves: a call for caution
www.tandfonline.com [PDF]
… O - Economic Development, Innovation, Technological Change, and Growth; P - Economic Systems; Q - Agricultural and … State Capabilities: The Role of Financial Incentives in the Call to Public … Google Scholar. Martín A. Rossi. The Quarterly Journal of Economics, Volume 128 …

Why firms issue convertible bonds: the matching of financial and real investment options
www.sciencedirect.com [PDF]
… O - Economic Development, Innovation, Technological Change, and Growth; P - Economic Systems; Q - Agricultural and … State Capabilities: The Role of Financial Incentives in the Call to Public … Google Scholar. Martín A. Rossi. The Quarterly Journal of Economics, Volume 128 …

Varieties of economic constructivism in political economy: Uncertain times call for disparate measures
www.tandfonline.com [PDF]
… O - Economic Development, Innovation, Technological Change, and Growth; P - Economic Systems; Q - Agricultural and … State Capabilities: The Role of Financial Incentives in the Call to Public … Google Scholar. Martín A. Rossi. The Quarterly Journal of Economics, Volume 128 …

Inside the “black box” of sell‐side financial analysts
onlinelibrary.wiley.com [PDF]
… O - Economic Development, Innovation, Technological Change, and Growth; P - Economic Systems; Q - Agricultural and … State Capabilities: The Role of Financial Incentives in the Call to Public … Google Scholar. Martín A. Rossi. The Quarterly Journal of Economics, Volume 128 …

The financial crisis: A wake-up call for strengthening regional monitoring of financial markets and regional coordination of financial sector policies?
www.elgaronline.com [PDF]
… O - Economic Development, Innovation, Technological Change, and Growth; P - Economic Systems; Q - Agricultural and … State Capabilities: The Role of Financial Incentives in the Call to Public … Google Scholar. Martín A. Rossi. The Quarterly Journal of Economics, Volume 128 …

Ringing the changes? Union recognition and organisation in call centres in the UK finance sector
onlinelibrary.wiley.com [PDF]
… O - Economic Development, Innovation, Technological Change, and Growth; P - Economic Systems; Q - Agricultural and … State Capabilities: The Role of Financial Incentives in the Call to Public … Google Scholar. Martín A. Rossi. The Quarterly Journal of Economics, Volume 128 …

The call of the wild: Call centers and economic development in rural areas
onlinelibrary.wiley.com [PDF]
… O - Economic Development, Innovation, Technological Change, and Growth; P - Economic Systems; Q - Agricultural and … State Capabilities: The Role of Financial Incentives in the Call to Public … Google Scholar. Martín A. Rossi. The Quarterly Journal of Economics, Volume 128 …

Founders versus non-founders in large companies: Financial incentives and the call for regulation
link.springer.com [PDF]
… O - Economic Development, Innovation, Technological Change, and Growth; P - Economic Systems; Q - Agricultural and … State Capabilities: The Role of Financial Incentives in the Call to Public … Google Scholar. Martín A. Rossi. The Quarterly Journal of Economics, Volume 128 …