Chapter 02 · Section 2.1

In summary

           LONG CALL   SHORT CALL   LONG PUT    SHORT PUT


Profit 
potential  Unlimited    limited    practically   unlimited 
                                   unlimited*     
Risk of
loss       limited     Unlimited     limited     practically  
                                                 unlimited *
This information is useful to keep in mind when deciding upon an appropriate strategy. For the put, we use the expression practically unlimited" because the profit (long put) or loss potential (short put) is limited to the exercise price minus the premium because the price of the underlying cannot fall below zero.