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GARP 2016-FRR Exam - Topic 1 Question 21 Discussion

An options trader is assessing the aggregate risk of her currency options exposures. As an options buyer, she can potentially ___ lose more than the premium originally paid. As an option seller, however, she has a ___ risk on the contract and always receives a premium.
A) Never, unlimited
B) Sometimes, unlimited
C) Never, limited
D) Sometimes, limited

GARP 2016-FRR Exam - Topic 1 Question 21 Discussion

Actual exam question for GARP's 2016-FRR exam
Question #: 21
Topic #: 1
[All 2016-FRR Questions]

An options trader is assessing the aggregate risk of her currency options exposures. As an options buyer, she can potentially ___ lose more than the premium originally paid. As an option seller, however, she has a ___ risk on the contract and always receives a premium.

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Suggested Answer: A

by Anisha at May 27, 2026, 04:30 PM

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Bethanie
I feel like the seller's risk is definitely unlimited, but I can't remember if the buyer's risk is sometimes or never. This is tricky!
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Wilda
5 days ago
I practiced a similar question, and I think the buyer's loss is limited to the premium. So, C could be the answer.
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Yong
10 days ago
I'm not entirely sure, but I remember something about sellers having unlimited risk. So maybe it's A or B?
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Verona
15 days ago
I think as an options buyer, you can never lose more than the premium paid, right? That sounds familiar from my notes.
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