Series 7 practice questionmediumOptions Calculations 27
An investor buys 1 XYZ 50 call at 3. What is the maximum possible loss?
- A$5000
- Bunlimited
- C$5300
- D$300✓ Correct answer
Explanation
Why D — $300
A buyer of a call can lose only the premium paid. One contract represents 100 shares, so the maximum loss is 3 x 100 = $300.
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