SIE practice questionmediumPut options
An investor sells an uncovered (naked) put. What is the maximum potential loss?
- AStrike price minus zero, per share
- BStrike price minus premium paid, per share✓ Correct answer
- CUnlimited
- DPremium received
Explanation
Why B — Strike price minus premium paid, per share
If the stock drops to zero, loss is strike - premium. Loss is not unlimited for puts and not limited to premium.
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