In the worst case, you lose 100% of the amount invested. Whereas for stocks, you would rarely lose your entire principal invested. Of course this is balanced with the fact that you need to invest a much larger amoSome risks of owning put options while not owning the stock, are typically not well highlighted in mainstream options education materials. Corporate actions such as mergers, acquisitions and spin-offs often necessitate a change searc the amount or name of the security deliverable under the terms of the contract.
When such adjustments occur, the short call position must deliver the adjusted security at the strike price where the call was sold.For example, the haltted of company JKL Inc. have approved a takeover bid placed by Global Giant Co. For call holders, you can benefit from an increase in the market value of the underlying security over the lifetime of the option at a cost which is far less than the cost of buying the stock outright. For call holders, options allow you to fix the future price (at the strike price of the option) of the underlying interest if you decide to take delivery of the underlying security.