Limited risk
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Campbell R. Harvey's Hypertextual Finance Dictionary
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Limited risk
The risk inherent in
options
contracts
, which is much smaller than that of a
futures
contract
, which has unlimited risk. The maximum loss in buying a
call otpion
, for example, is only the
premium
paid for the
option
.
Copyright © 2000,
Campbell R. Harvey
. All Rights Reserved.
A Guide to Futures | Options Market Terminology : English English Dictionary
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Limited risk
A concept often used to describe the option buyer's position. Because the option buyer's loss can be no greater than the premium he pays for the option, his risk of loss is limited.
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