Series 7 - General Securities Representative Exam
Maxwell sold a straddle on ABC corp and collected a premium of 17.00. What is his maximum risk on this trade?
Strike prices added together minus 17.00C
Strike prices subtracted from one another plus 17.00D
Maxwell sold a call and a put at the same strike price and collected 17.00. Since these are naked options, and since he has sold a call, his maximum risk is unlimited.