Chapter 06 · Section 6.1

Potential gains

Your potential gains are:

a) limited on the upside and unlimited on the downside.
b) limited on the downside and unlimited on the upside.
• c) unlimited on both the upside and the downside.
  No. Answer (c) is the type of profit/loss profile you would have in a long straddle position. It cannot be achieved using only one type of option.
  d) limited on both the upside and downside.