Chapter 02 · Section 2.1

Profit/loss diagrams are used to:

In general Profit/loss diagrams (like the ones you see above) are used to:

a) illustrate the potential profit or loss inherent in a long option position.
b) illustrate the potential profit or loss inherent in a short option position.
• c) illustrate the potential profit or loss inherent in an option, futures or spot position.
  Yes. A profit/loss diagram can be drawn to represent any options, futures or forward position, even for a combined position of several instruments. Continue
  d) None of the above

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