Chapter 02 · Section 2.1

Potential Profits and Losses

Which of the following positions imply an unlimited or practically unlimited profit potential and limited risk of loss?

a) Long call
b) Long put
• c) Short call
  No. If you are "short a call" you are the writer of a call and have an obligation, not the right, to sell. Thus you have unlimited risk of loss and a profit potential limited to the premium you received for writing the option.
  d) Short put
  e) a and b
  f) a and c

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