Chapter 06 · Section 6.1

Loss Potential

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

The investor's potential loss is:

a) unlimited.
Yes. Should the price of the underlying rise or fall, the writer of a call or put would have to deliver, exposing himself to unlimited loss if he has to deliver on the call and practically unlimited loss if on the put. Continue
b) limited.