Chapter 05 · Section 5.1
Hedging Short Positions
A short position in the underlying implies in case of falling prices:
b) Unlimited loss potential.
No. If you have to deliver dollars in two months, you are short dollars. A decreasing dollar means that you would be able to buy the dollar cheaper in the future, thereby you will have gained from decreasing prices.
a) A profit potential of up to the price at which the asset was sold.
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