Puts Potential Profit

Quantitative Finance Level 2

True or False?

If you own a put, your potential profit is unlimited.

True False

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Calvin Lin by Calvin Lin

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1 solution

In a put operation your gains are capped to the level of premiums received from the counter-party.

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That is true if you sell the put, but not if you buy the put (aka own the put).

Calvin Lin Staff - 6 years, 3 months ago

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