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.
b) limited.
A call option buyer pays a premium for the right to choose whether to buy the underlying asset. The worst that can happen is that the price of the underlying will fall and the investor will lose the amount he paid for the option.