When buying an option, the risk is defined and limited to the premium paid for the option. This means that the maximum potential loss is the premium paid, and there is no additional liability or risk beyond that amount.

Here are some key points about defined risk:

1. *Limited risk*: The risk is capped at the premium paid, providing a clear and defined limit to potential losses.

2. *No additional liability*: The buyer of the option has no additional liability beyond the premium paid.

3. *No margin calls*: There are no margin calls or additional funding requirements beyond the initial premium paid.

4. *Controlled exposure*: The buyer has control over the amount of risk taken on, as the premium paid determines the level of exposure.

5. *Flexibility*: Options can be bought and sold, allowing for flexibility in adjusting risk exposure.

Overall, defined risk is a key benefit of options trading, as it allows buyers to manage and limit their risk exposure while still participating in market opportunities.