A trader buys 500 shares of ABC stock at $50 a share and buys 5 ABC 45 puts @ 5.00 to hedge his position. What is the trader's maximum profit?

Explanations

The profit potential is unlimited. The question does not specify what the profit is at expiration. The puts could expire worthless if ABC is above 45 at expiration and the trader would still have the 500 shares of stock. Therefore, the profit potential is unlimited