Chapter 06 · Section 6.1

Loss Potential

Buy Calls
Market Outlook   :  Bullish
Profit Potential :  unlimited
Loss Potential   :
Breakeven Point  :

The investor's potential loss is:

a) unlimited.
No. Even if the market takes a drastic decline in price levels, the holder of a call is under no obligation to exercise the option. He may let the option expire worthless.
b) limited.