Chapter 05 · Section 5.1

Hedging Long Positions

A long stock position implies:

a) a loss potential equivalent to the price paid for the stock;
b) a loss potential equivalent to the premium of an option on this stock;
c) unlimited profit potential;
d) limited profit potential.
e) a and c
• f) b and d
  No. If you are long stock, you will profit or lose by the full amount of a change in the price of the stock.If you are long stock, you will profit or lose by the full amount of a change in the price of the stock.

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