InvestorQ : I bought a call option on SBI thinking it will go up sharply but the stock has crashed by 20%. How do I manage this huge loss now?
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Katherine Gonsalves made post

I bought a call option on SBI thinking it will go up sharply but the stock has crashed by 20%. How do I manage this huge loss now?

Answer
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Rutuja Nigam answered.
2 years ago


When you buy a call option, your loss is limited to the premium paid. If you bought SBI 250 call at Rs.4 then your maximum loss is Rs.4 even if SBI goes down to Rs.200 or even to Rs.150. Of course, if you have sold call options then your losses can be unlimited if the stock price moves up sharply.