: Theoretically unlimited for call buyers, as there’s no ceiling on how high a stock price can go.
Adam's new book, "Irrational Together: The Social Forces That Invisibly Shape Our Economic Behavior" (University of Chicago Press) Investopedia Buy or Sell Options? Which Is Better?
: Generally lower (less than 50%) . For a buyer to win, the stock must move significantly and quickly in the right direction to overcome the cost of the premium and time decay.
Buying an option (a call if you're bullish or a put if you're bearish) gives you the , but not the obligation, to trade a stock at a fixed price.
: Your risk is strictly capped at the premium you paid . Even if the stock crashes to zero, you can't lose more than your initial investment.