Chapter 06 · Section 6.1

Loss Potential

Market Outlook  : BEARISH
Profit Potential: practically 
                  unlimited
Loss Potential  :
Breakeven Point :

The investor's potential loss is:

b) limited.
Yes. If the price of the underlying asset rises instead of falling as the investor has anticipated, he may let the option expire worthless. The most he will lose is the premium he paid for the option. Continue