Which of the following statements is TRUE?

Question

Quizplus · Accepted Answer

DThe maximum possible loss to the seller of a call option is unlimited because if the stock's price rises significantly, the seller has to provide the stock at the strike price, which could be much lower than the market price. For the seller of a put option, the maximum loss is also unlimited theoretically because if the stock price goes to zero, they have to buy the stock at the strike price, which could be significantly higher than the current market price of zero. The buyers of both call and put options have limited losses to the premium they paid for the options.

Which of the Following Statements Is TRUE