SIE practice questionmediumMax gain/loss calculations
What's the maximum loss for an uncovered call (naked call) seller?
- AStrike price times 100
- BThe premium received
- CUnlimited, if the stock rises sharply✓ Correct answer
- DStrike price minus premium
Explanation
Why C — Unlimited, if the stock rises sharply
Uncovered call writers face unlimited risk if the stock price rises. B is maximum gain, C and D are not risk measurements.
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