Chapter 05 · Section 5.1

Hedging Short Positions

A short position in the underlying implies in case of falling prices:

• a) A profit potential of up to the price at which the asset was sold.
  Yes. If you have an unhedged short position, decreasing prices mean that at a later time you will be able to buy the asset at a lower price, and thereby you will have profited from the decrease. Continue
  b) Unlimited loss potential.

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