If I buy a call and a put at the same price point, what is the maximum money that can be lost?
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The maximum costs of an option buyer is simply the premium of the option bought
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Pang Zhe Liang
29 Jan 2020
Fee-Based Financial Advisory Manager at Financial Alliance Pte Ltd (IFA Firm)
The maximum loss will be the cost of the options, which is the addition of the price of the call opt...
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To use the correct technical terms, I assume u are saying if u long a call, and long a put at the same strike price. To say buy at same price point, it could be misunderstood as the premium paid for the call and the put.
The maximum lost will be for the total premium u have paid for the 2 option. The maximum lost happens when the settlement price of the underlying stock is at the strike price of your options, where both of your options will expire worthless.
This strategy of long both a call and put at the same strike price is called a Straddle.