--- title: "Can an option buyer lose more than the premium, and can I" description: "An option buyer cannot lose more than the premium paid plus charges, because the buyer holds a right and can let it lapse." source_url: "https://www.rupeecase.com/learn/questions/can-option-buyer-lose-more" --- A long call cannot lose more than its premium, at expiry or before it Profit and loss for one lot of the at the money call bought at its 10 Jun 2026 settle price, at expiry and with 10 days left, for the 30 Jun 2026 chain. Neither line goes lower than the loss of the premium paid. Source: NSE end of day data, computed by RupeeCase. As of 10 Jun 2026. For an option you bought, no. The most a buyer can lose on the option is the premium paid, plus charges. The chart shows the at the money call bought on 10 Jun 2026: its loss never goes beyond the premium paid, at expiry or with time left. The reason is the buyer's right. An option gives the buyer a right, not an obligation, so the buyer can let it lapse when the trade goes against them. The seller has the reverse position: an obligation, and a loss that keeps growing as the index moves. The chart for a seller is the mirror image of this one, with no cap on the loss. Holding to expiry is allowed. Index options are cash settled, so one in the money at expiry pays its intrinsic value in cash, and one out of the money expires worthless. Time value is zero at expiry, so a buyer who holds to the end gives up whatever time value was left. Stock options differ. One in the money at expiry settles by delivery of shares, so the buyer then has to pay for the shares, or deliver them for a put. That is a separate obligation, larger than the premium. The [question on physical settlement](/learn/questions/physical-settlement-stock-fo) explains it. Charges apply whatever the result. Brokerage and exchange charges come on each trade, and STT applies on an option sale and on exercise. The premium is the most that can be lost on the option itself, and the charges come on top. **Before you trade.** Derivatives trading carries a high risk of loss. SEBI's study "Profitability of Individual Traders in the Equity Derivatives Segment (FY25 to FY26)" (August 2026) found that 87.7% of individual traders in equity F&O made net losses in FY26, with aggregate net losses of Rs 91,685 crore. [Read the SEBI study](https://www.sebi.gov.in/reports-and-statistics/research/aug-2026/study-profitability-of-individual-traders-in-the-equity-derivatives-segment-fy25-fy26-_103835.html) Can an option buyer lose more than the premium, and can I hold options to expiry?An option buyer cannot lose more than the premium paid plus charges, because the buyer holds a right and can let it lapse, while a seller carries an obligation with no such cap. Index options are cash settled and can be held to expiry, but a stock option in the money at expiry settles by delivery of shares. LGo deeper ## Where Learn teaches this. [Go deeperBuyer or seller: payoffs, margin, win rate and expectancy9 min, Beginner](/learn/path-14/module-14-3-option-buyer-vs-seller)[Go deeperExpiry and settlement: cash, physical, exercise and STT8 min, Beginner](/learn/path-14/module-14-6-expiry-and-settlement)[Try itPayoff builderLegs from a dated chain, the expiry and before expiry curves, breakevens and the charges.](/learn/tools/payoff-builder) SSources ## Go to the source. 3 sources, NSE the most cited The publisher of each source listed below. Source: Module undefined source list. 1. [SEBI investor education, Understanding derivatives](https://investor.sebi.gov.in/understanding_derivatives.html) SEBI 2. [NSE, equity derivatives contract specifications (expiry, lot size, settlement)](https://www.nseindia.com/static/products-services/equity-derivatives-contract-specifications) NSE 3. [NSE, equity derivatives securities transaction tax (rates from 1 Apr 2026)](https://www.nseindia.com/static/products-services/equity-derivatives-securities-transaction-tax) NSE ?Questions people ask ## Related questions. [QuestionOption buying or option selling: which is better?Beginner, trap check](/learn/questions/option-buying-vs-selling)[QuestionWhat happens if my option expires in the money or out of the money?Beginner](/learn/questions/option-expires-itm-or-otm)[QuestionWhat is STT on options and on exercise?Beginner](/learn/questions/stt-on-options)[QuestionFutures or options: which suits a beginner?Beginner](/learn/questions/futures-or-options-for-beginners) [All 130 questions](/learn/questions/) Explore next ## Go deeper on this question. * [QuestionHow do people set a stop loss on options, and when do they exit?A short answer with a dated chart](/learn/questions/stop-loss-on-options) * [GlossaryInvesting glossary, 230 termsPlain word definitions, and the app’s own](/learn/glossary) * [Free module 14.3Buyer or seller: payoffs, margin, win rate and expectancy9 min read](/learn/path-14/module-14-3-option-buyer-vs-seller) * [QuestionFutures or options: which suits a beginner?A short answer with a dated chart](/learn/questions/futures-or-options-for-beginners) * [Free module 14.6Expiry and settlement: cash, physical, exercise and STT8 min read](/learn/path-14/module-14-6-expiry-and-settlement) * [QuestionsQuestions on futures and optionsShort answers, each with a dated chart](/learn/questions/) Community ## Join my WhatsApp group. 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