Question

Options are securities that provide the potential to act (to buy or sell something) or to do nothing. Buyers of options who do nothing will suffer a loss equal to what? a) The expiration value of the underlying asset b) The strike price of the option c) The future value of the underlying asset d) The option premium e) The current value of the underlying asset.

Answer 1

d) the option premium

Step-by-step explanation:

if the buyer doesn't exercise his right, he will simply have lost the the premium he paid for the acquiring the option, therefore, his benefit may be unlimited, but his loss is limited to the premium he paid. that is a common behavour when the price of the option is lower, known as the exercise price.