SIE - Securities Industry Essentials Exam
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Which of the following options positions features limited risk and unlimited profit potential?
Long put
A
Long call
B
Short covered call
C
Short call
D
Explanations
Long call. The maximum risk is the amount paid for the call. Since an underlying asset can theoretically go to infinity, the profit potential is unlimited. Long puts have a defined profit potential because the underlying can only go to zero. Short calls have undefined risk and defined profit potential. Covered calls have limited risk and limited profit potential.
Pricing
Basic
Part of the questions for each course
-
- Course
- Questions
-
- SIE
- 20 of 150
-
- Series 6
- 30 of 500
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- Series 7
- 50 of 625