Chapter 06 · Section 6.1

Loss Potential

Market Outlook   : BEARISH
Profit Potential : limited
Loss Potential   :
Breakeven Point  :

The investor's potential loss is:

b) limited.
Yes. The trader has offsetting positions at different exercise prices. If the market rises rather than falls, the options will be out-of-the-money and expire worthless. Since the trader has paid a net premium. Continue