Series 7 practice questionmediumOptions Calculations 12
An investor buys 1 XYZ 55 call at 3. What is the maximum possible loss?
- A$300✓ Correct answer
- B$5500
- Cunlimited
- D$5800
Explanation
Why A — $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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