Chapter 02 · Section 2.1

The loss if the stock trades below $30

Shawn is the holder of a call option, i.e. he is long a call option. It is a Ford Dec 30 call and the premium he paid was $ 2 per share.

...and what would the loss be if the Ford stock trades below $30?

• a) greater
  No. Shawn is long an option. The only thing he can lose is the price of the option, i.e. the premium.
  b) the same
  c) less

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