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. Should the price of the underlying remain stable, the most the trader would lose is the premium he paid for the options. The more the options are out-of-the-money, the lesser the premiums. Continue