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What position has more downside exposure: a short position in a call or a short position in a put? That is, in the worst case,
What position has more downside exposure: a short position in a call or a short position in a put? That is, in the worst case, in which of these two positions would your losses be greater?
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Part 1
Downside exposure is larger with a
short put
short call
(the downside is unlimited) than with a
short call
short put
(the downside cannot be larger than the strike price).
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