An Interest Rate Call Option is a derivative that gives the holder the right, but not the obligation, to pay a fixed rate and to receive a variable rate for a specific period. Interest rate call options can be put in contrast with interest rate puts. If you are looking for a call option at an attractive interest rate, but don't want to take any risk, you may wish to consider this option. This is an attractive alternative if your goal is to gain the right but not have the obligation of paying fixed interest at a specified date. The fixed rate is calculated by an appropriate comparison of the current price of the underlying security with the exercise price of the option.Interest rate call options are popular with long-term traders and speculators. They allow a trader to do something with his or her funds without having to take any risk. Investors can take advantage of these option contracts and receive a fixed or fixed-rate income, which is determined by the price of the underlying asset. When the price of the underlying asset increases, it will make the option contract worth more. The benefit of this strategy is that a trader does not have to worry about the stock going down.Interest rate call options are often used to speculate on changes in interest rates and other financial market factors. The holder of the option is given the right but not the obligation to buy a security (the underlying asset) at a predetermined price and receive a predetermined interest rate for a specific period of time. The right is valid only if a certain event (such as the expiration date) occurs before the option's expiration date. This event can occur when the underlying asset rises or falls, or remains unchanged.
