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You can learn more about the requirements we comply with in producing accurate, unbiased content material in oureditorial coverage. In the above example, you should contemplate whether or not the ABC option is in or out of the money before closing the position. If the decision is out of the cash, you can buy back the call option at a much less expensive price. If the decision is within the money, you can a) purchase again the call option at a higher worth or b) buy shares to offset the decision. The bare call vendor is exposed to probably unlimited losses, however only limited upside potential—that being the value of the option’s premium.
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