The owner of a three month call option allows the option to expire unexercised. The owner
A) has a capital loss equal to the market price of the stock.
B) has a capital loss equal to the strike price.
C) has a capital loss equal to the premium.
D) has a capital loss equal to the market value less the strike price.

Question

Quizplus · Accepted Answer

The owner of a call option who allows it to expire unexercised incurs a capital loss equal to the premium paid for the option, as this is the amount invested and lost when the option is not exercised.

The Owner of a Three Month Call Option Allows the Option