What is Call buyer and Call seller Expectations and Losses

Question

Accepted Answer

Call buyers expect the price of the underlying asset to rise, while call sellers expect it to fall.

Call buyers have the right to buy the underlying asset at a predetermined price, so they expect the price to rise above that level.
Call sellers have the obligation to sell the underlying asset at a predetermined price, so they expect the price to stay below that level.
Call buyers' losses are limited to the premium they paid for the option, while call sellers' losses are potentially unlimited if the price of the underlying asset rises significantly.
Call buyers can profit from a rise in the price of the underlying asset, while call sellers can profit from a decline in the price of the underlying asset.
Call buyers and sellers can use options to hedge their positions or speculate on the direction of the market.

Top CSC Global Senior Associate interview questions & answers