Options

Option Buyer

The party who pays the premium to acquire the right (not obligation) an Option provides — maximum loss capped at the premium paid.

An Option buyer pays the premium upfront to acquire the right, but not the obligation, to transact the underlying at a fixed price by a certain date. Their maximum possible loss is capped at the premium paid — a defining, structural advantage compared to a Futures position.

See the full buyer vs seller risk comparison in What Are Options? The Complete Beginner’s Guide.