The maximum loss a buyer of a stock call option can suffer is equal to
A) the striking price minus the stock price.
B) the stock price minus the value of the call.
C) the call premium.
D) the stock price.
E) None of the options are correct.

Question

Quizplus · Accepted Answer

The maximum loss a buyer of a stock call option can suffer is the amount paid for the call option, known as the call premium. This is because the buyer is not obligated to exercise the option; if the market price is unfavorable, they can let the option expire, losing only the premium paid.

The Maximum Loss a Buyer of a Stock Call Option