Which one 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 the right, but not the obligation, to purchase the underlying asset at the strike price. Their profit potential is unlimited, as the price of the underlying asset can rise infinitely. However, their loss potential is limited to the premium paid for the option. Option contracts do have an expiration date, and European options are no exception. Therefore, A, C, and D are incorrect choices.

Which One of the Following Is True for the Owner