Chapter 05 · Section 5.1

Maximum Loss

Suppose that the current index value is 450 and that this is exactly the amount you paid when you bought your stock portfolio. You have bought a put (contract size: 1 x index) with a strike of 440 at 7.50. You can see that your potential loss is limited.

What is your maximum loss?

a) 17.30
b) 20
c) 18.30
d) 450

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