Chapter 06 · Section 6.1

Loss Potential

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

The investor's potential loss is:

b) limited.
Yes. If the price of the underlying asset remains stable instead of either rising or falling as the trader anticipated, the most he will lose is the premium he paid for the options. Continue