Options are highly leveraged finance instruments that change the risk profile of a stock. Under the right circumstances, option strategies offer a high rate of return.
If you own a call option on a stock, your potential profit is unlimited.
Note: No other corresponding trades are done. In particular, she does not hedge her delta exposure.
A) An American call on the $10 strike that expires in January
B) An European call on the $10 strike that expires in January
True or False?
Because a call has unlimited profit potential, hence there is no upper bound on the price of a call