An call option whose underlying is a forward contract. This option gives the holder the right to enter into a forward contract whereby he can buy a specific underlying asset at a certain future time for a certain price determined in the forward contract. In a forward option, the contract specifies a period of time, rather than a certain date, during which the holder will exercise his right to trade the underlying. The forward option is, in essence, an agreement to trade in the future for a fixed price set today.

If exercised, a forward call allows the holder to take a long position in a forward contract associated with a specific exercise price. The value of the exercised call is equal to that of the delivered forward contract.