Dictionary of Finance and Investment Terms: limited risk
limited risk
risk in buying an options contract. For example, someone who pays a premium to buy a call option on a stock will lose nothing more than the premium if the underlying stock does not rise during the life of the option. In contrast, a futures contract entails unlimited risk, since the buyer may have to put up more money in the event of an adverse move. Thus options trading offers limited risk unavailable in futures trading.
Also, stock analysts may say of a stock that has recently fallen in price, that it now has limited risk, reasoning that the stock is unlikely to fall much further.
