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Why Is the Loss Limited to the Premium for the Option Buyer?

The buyer's right, not obligation, allows them to abandon the contract, limiting loss to the initial premium paid.
Greeks.Live02.11.25

Why Is the Loss Limited to the Premium for the Option Buyer?

The option buyer's loss is limited to the premium because they have the right, but not the obligation, to exercise. If the market moves unfavorably, they can choose to let the option expire worthless, having only lost the initial cost (the premium).

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