Series 7 practice questioneasyOptions — Call Options Max Gain/Loss
What is the maximum gain for a buyer of a call option?
- ATheoretically unlimited✓ Correct answer
- BThe strike price minus the premium
- CThe premium paid
- DThe strike price
Explanation
Why A — Theoretically unlimited
The maximum gain for a call buyer is theoretically unlimited because there is no cap on how high the underlying stock price can rise. The profit equals the stock price minus the strike price minus the premium paid, and the stock can rise indefinitely.
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