Chapter 05 · Section 5.1

The highest potential loss

You can influence the maximum loss of your combined portfolio by selecting the appropriate put option. Which of the following options would imply the highest potential loss for the combined portfolio?

• a) the puts 430
  Yes. The puts with the lowest strike price (430) may be the cheapest options, but their hedging influence only starts when the index reaches a value below 430, that is when an important loss has already been made. Continue
  b) the puts 450
  c) the puts 470

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