This is true for options that are in the money; the maximum amount that can be lost is the premium paid.
The strike price also helps us to identify whether an option is In the Money(ITM), At the Money(ATM) or Out of the Money(OTM) when compared to the price of the underlying security. For call options, the strike price is where the security can be bought (up to the expiration date), while for put options the strike price is the price at which shares can be sold.
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