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What Is the Maximum Loss a Buyer of an OTM Option Can Incur?

The premium paid for the option contract; risk is limited to the cost.
Greeks.Live14.11.25

What Is the Maximum Loss a Buyer of an OTM Option Can Incur?

The maximum loss for the buyer of any option, including an OTM option, is limited to the premium paid to acquire the contract. If the OTM option expires worthless (which is highly likely), the buyer simply loses the entire premium.

This is a key advantage of buying options: risk is defined and limited, unlike shorting the underlying asset directly.

How Does the Option’s Premium Relate to the Concept of Maximum Loss for the Buyer?
Why Is the Maximum Loss for a Long Call Option Limited to the Premium Paid?
Does the Limited Loss Apply to Both Call and Put Option Buyers?
What Is the Premium Paid for an Option Contract?

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