Chapter 06 · Section 6.1
Profit Potential
Market Outlook : BULLISH Profit Potential: Loss Potential : Breakeven Point :
The investor's profit potential is:
a) unlimited.
b) limited.
The trader has offsetting positions, but at different exercise prices. If the
market rises, the options will expire worthless and he will realize a gain on the net premium, since he receives more for writing the put at a higher price.