The seller of a call option:

Question

Quizplus · Accepted Answer

The seller of a call option has a potential for profit that is limited to the option premium received. This is because the buyer of the call option has the right to purchase the underlying asset at the strike price, so if the price of the underlying asset rises above the strike price, the seller of the call option may have to sell the asset at a lower price than the market value, resulting in a loss. However, the seller of a call option does have unlimited risk potential as the price of the underlying asset could potentially rise indefinitely.

The Seller of a Call Option