Which of the following is true for the owner of a call option?
A) The loss potential is unlimited.
B) The profit potential is unlimited.
C) The premium exceeds the strike price.
D) There is no expiration date, unless the option is a European call.

Question

Quizplus · Accepted Answer

The owner of a call option has unlimited profit potential as the option gives them the right to buy the underlying asset at a predetermined strike price, which means they can potentially buy the asset at a lower price and sell it at a higher price in the market. Option premiums can vary and may or may not exceed the strike price, and all options have an expiration date. The loss potential for the owner of a call option is limited to the amount of the premium paid for the option.

Which of the Following Is True for the Owner of a Call