Leverage, as we all know, works two ways. Let’s continue the example where the investor puts all $4,000 into call options, and let’s suppose that Halliburton doesn’t move within the three-month option period. The stock buyer still has his original stake intact and has lost nothing. Indeed, he has collected any dividends paid out during the three-month period. The option buyer, however, receives no dividends and has lost $4,000, 100 percent of his investment.
